Global Corporate Costs Surge by $1.2 Trillion, with Tariffs Playing a Major Role, S&P Analysis Reveals

Trillion-Dollar Corporate Squeeze

Companies across the globe are facing a massive $1.2 trillion increase in projected costs for this year, a new S&P Global report finds. This figure represents a sharp revision from forecasts made at the start of the year, before the landscape for trade and tariffs shifted dramatically. According to the analysis, this corporate squeeze is leading to higher prices for consumers and lower profits for businesses.

The report, which aggregates forecasts from more than 15,000 analysts covering approximately 9,000 public companies, estimates total company expenses will reach $53 trillion this year. The firms analyzed represent about 85% of the global equity market. The report states that “global corporate margin expectations have contracted sharply” by about 0.64%, equating to $907 billion in lost profit among the covered firms.

How the Costs Break Down

This financial “wedge” is reportedly made up of a $600 billion increase in revenue forecasts being offset by a $1.5 trillion rise in cost expectations, leading to the net $907 billion profit loss. The analysis indicates that of this lost profit, roughly two-thirds, or $592 billion, is being passed directly to consumers through higher prices. The remaining one-third, approximately $315 billion, is being absorbed by the companies through lower earnings.

However, the report adds a critical nuance: “real output” is declining, meaning fewer goods are being produced. This suggests that consumers may ultimately be bearing more than the estimated two-thirds of the profit loss. The cost surge is attributed to a combination of factors, including tariffs, wage increases, energy prices, and rising capital expenditure, particularly in areas like Artificial intelligence infrastructure. The S&P report cautions that its $1.2 trillion estimate should be viewed as a “floor, not a ceiling,” as smaller firms without analyst coverage are likely also suffering significant losses.

Who Bears the Burden? A Heated Debate

The question of who ultimately pays for these increased costs is a subject of intense debate among economists and officials. In a recent speech, Fed Governor Christopher Waller, appointed by former President Trump, suggested the effects of tariffs on inflation have been modest. According to his analysis, the impact has been mostly felt by higher-income households, with little to no inflationary effect observed down the income scale.

Conversely, analysts from research firm TS Lombard present a starkly different picture, arguing the economic fallout is sharply divided by income. They describe a situation where the wealthy continue strong discretionary spending, while lower- and middle-income households bear the brunt of the hardship. Experts tell Fortune that tariffs typically function as a “regressive tax,” disproportionately impacting those with lower incomes.

“For higher-income households, this impact is minimal,” Mohammad Elahee, a professor of international business at Quinnipiac University, told the publication. He noted that luxury goods often maintain their price premium regardless of tariffs, and wealthier consumers can absorb increased costs without changing their lifestyle.

Christopher Hodge, an economist at Natixis CIB Americas, explained to Fortune that tariffs take a larger percentage of income from lower earners because these households spend a greater share of their income on goods—such as furniture, apparel, and electronics—which are commonly subject to tariffs, rather than on services. These industry developments in consumer goods pricing are part of broader market trends affecting household budgets.

Administration Response and Corporate Adaptation

The White House maintains that any strain on American consumers will be transitory. In a statement to Fortune, White House spokesperson Kush Desai said the administration’s position is that the cost of tariffs “will ultimately be borne by foreign exporters.” He added that companies are already responding to the new trade environment by shifting and diversifying their supply chains, including by onshoring production to the United States.

This corporate adaptation is part of wider related innovations in global supply chain management. The role of the sell-side analyst community, which covers major retailers like Walmart and Amazon, remains crucial in tracking these financial shifts. As companies navigate this costly new reality, the full economic impact on both corporate balance sheets and consumer wallets continues to unfold.

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