NextFin News - Midsized U.S. businesses have seen their tariff payments triple over the past year, according to a comprehensive analysis released on Thursday, February 19, 2026, by the JPMorganChase Institute. The report provides the most detailed evidence to date that U.S. President Trump’s aggressive trade policies, which saw average tariff rates jump from 2.6% to 13% last year, are causing significant economic disruption for the very domestic firms they were intended to protect. According to Chi Mac, business research director of the JPMorganChase Institute, the additional taxes have forced companies that employ a combined 48 million people in the U.S. to find ways to absorb the new expense, often by passing it along to customers in the form of higher prices, employing fewer workers, or accepting lower profits.
The JPMorganChase Institute report used payments data to look at businesses with revenues between $10 million and $1 billion and fewer than 500 employees, a category known as the “middle market.” These firms often lack the pricing power of large multinational companies to offset tariffs but are small enough to attempt quick supply chain changes. The analysis suggests that while U.S. President Trump’s goal of becoming less directly reliant on Chinese manufacturers has seen some success—with payments to China by these companies falling 20% below their October 2024 levels—the cost of this transition is being borne almost entirely by American businesses and consumers. This finding aligns with recent research by the New York Federal Reserve, which showed that nearly 90% of the burden for the 2025 tariffs fell on U.S. entities.
The tripling of tariff payments for midsized firms represents a fundamental shift in the cost of doing business in the United States. Unlike large corporations that can leverage global logistics networks to mitigate tax impacts, middle-market firms are often locked into specific supplier relationships or lack the capital to overhaul their manufacturing processes overnight. The JPMorganChase Institute data indicates that these firms are increasingly shifting transactions away from China toward other regions in Asia, but it remains unclear whether this represents a true decoupling or merely a rerouting of Chinese goods through third-party nations to avoid the direct tax. Mac noted that the institute plans to continue studying the issue as companies are still in the midst of adjusting to the new trade environment.
The economic fallout has created a sharp divide between the White House and the financial community. Kevin Hassett, director of the White House National Economic Council, recently dismissed the New York Federal Reserve’s findings as “an embarrassment,” maintaining the administration's stance that foreign exporters are the ones paying the tariffs. However, the JPMorganChase Institute’s payment-level data provides a more granular look at the actual cash outflows from American bank accounts to the U.S. Treasury. The 0.8 percentage point increase in consumer prices attributed to tariffs by academic economists further underscores the inflationary pressure these policies have exerted, despite U.S. President Trump’s 2024 campaign promise to tame inflation.
Looking ahead, the sustainability of this high-tariff environment remains in question. The Supreme Court is expected to rule soon on whether U.S. President Trump surpassed his legal authority by declaring an economic emergency to bypass Congress and impose baseline taxes on goods last April, an event he termed “Liberation Day.” If the legal challenge fails, midsized companies may be forced into a permanent state of lower profitability or higher consumer pricing. The 20% drop in direct payments to China suggests a structural shift is underway, but the tripling of the tax bill suggests the “transition costs” are far higher than the administration initially projected. For the 48 million Americans employed by these midsized firms, the long-term impact on wage growth and job security will depend on whether these companies can successfully navigate a global trade landscape that has become significantly more expensive and less predictable.
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