US President Donald Trump’s tariffs are leading to a trillion-dollar increase in corporate spending this year, much of it passed on to consumers through increased product prices, S&P Global said in a report released Thursday.
Companies are expected to lose around $1.2 trillion more in 2025 than originally thought as the trade and tariff landscape has changed dramatically, according to the report.
Financial review and lost profit
S&P revised its spending forecast as of Jan. 1 based on an analysis of roughly 9,000 public companies. A recent estimate now projects total corporate spending to reach $53 trillion for the year, Fortune said.
Key drivers of this revision include tariffs, wage increases, energy costs and rising capital spending, particularly in AI infrastructure.
The report highlights a sharp drop in expectations for “global corporations” margins. Sell-side analysts covering the biggest global retailers, such as Walmart, Amazon and Costco Wholesalers, estimate a total of $907 billion in lost profits.
Consumer burden
Of the estimated $907 billion in lost profits, the report found that roughly two-thirds, or $592 billion, is passed on to consumers through higher prices. The remaining one-third, or $315 billion, is absorbed internally by companies through lower profits.
The report shows that “real output” is falling, meaning that these companies are producing fewer goods.
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In addition to the 9,000 public firms analyzed, the report includes expected cost increases of about $155 billion for “uncovered public firms” and $123 billion for private equity and venture capital-backed companies. Together, this brings total incremental costs to $1.2 trillion in 2025.
The Income Inequality Debate
A central debate has emerged over who bears the brunt of tariff-driven price increases. Trump-appointed Fed Governor Christopher Waller argued that the effects of the tariffs on inflation were modest and mostly felt by higher-income households.
However, analysts from TS Lombard disagree. They argue that the economic impact of the tariffs is sharply divided by income, with the rich largely insulated while lower- and middle-income households bear most of the burden.
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Christopher Hodge, an economist at Natixis CIB Americas, a global financial institution, told Fortune that the tariffs take a larger percentage of income away from lower-income people because low- and middle-income households spend a large portion of their income on goods — many of which are now taxed — rather than services.
“Tariff-sensitive categories – such as furniture, clothing, electronics and home appliances – are heavily consumed by younger and middle-income families furnishing homes and raising children,” he added.
