Tariff Costs Hit Middle Market

A new report released by the JPMorgan Chase Institute warns that U.S. tariffs, including those currently in effect and newly proposed increases, could impose massive costs on midsize American businesses—potentially exceeding $180 billion annually.

In its report, “Exposure to Tariffs for Midsize Firms by Metro Area,” the Institute estimates that current tariff policies are already costing midsize firms approximately $82.3 billion annually, or $2,080 per employee.

These firms, defined as those with annual revenues between $10 million and $1 billion, represent a critical segment of the U.S. economy.

“Tariffs now cost the average midsize firm 3.1 percent of its total payroll,” the report states. “These costs are borne directly, regardless of whether the firm imports goods itself or buys them through domestic intermediaries.”

The projected burden rises sharply under a proposed tariff regime introduced in April 2025, which would impose higher rates across a broader range of imported goods.

Under that scenario, midsize businesses would see costs surge to $187.7 billion, or $4,740 per employee.

The Institute identifies wholesale and retail trade as the most heavily affected sectors, with firms in these industries facing average annual tariff costs of more than $5,000 per employee.

Geographic Disparities

Geographic disparities are also stark. Metro areas with high concentrations of trade-related businesses and global supply chain linkages—particularly in Southern California, Texas, New York, and New Jersey—are bearing the brunt of the tariff exposure.

“The burden of tariffs is not distributed evenly,” the report notes. “In Los Angeles, the average midsize firm pays $5,260 per employee annually in tariffs, more than double the national median.”

The report also cautions that even firms not directly engaged in importing may be affected through supply chain costs, as tariffs ripple downstream to purchasers of intermediate goods.

“Tariffs impose costs even on firms that do not import directly,” the authors conclude. “This exposure is widespread and may influence business decisions on hiring, pricing, and investment.”

Report [.pdf]