Midsize US Firms Adapt to Tariffs, Paying Staggering Costs: JPMorgan Report

Last updated Feb 19, 2026

Impact of 2025 Trade Policies on Midsize U.S. Firms: A JPMorgan Analysis

JPMorgan Analysis on U.S. Midsize Firms and the Trade Policies of 2025

A recent JPMorgan Chase Institute study provides insights into how aggressive trade policies introduced in 2025 have impacted midsize American firms’ relationships with Chinese suppliers. Despite achieving the goal of reducing American reliance on Chinese manufacturing, these policies have resulted in considerable financial implications for U.S. companies.

The Impact of Tariffs on Midsize Firms

The study, “Tracking international payments: How midsize firms are adapting to tariffs?” suggests that midsize American businesses, with revenues ranging from $10 million to $1 billion, are struggling under historic financial pressures. As a result of the trade policies, the cost of importing goods has skyrocketed, putting a significant strain on these companies.

These businesses are seeking alternative suppliers to Chinese manufacturing and are paying a hefty price for imports. Following the enforcement of increased tariff rates and new universal tariffs in April 2025, these firms’ monthly tariff payments have tripled compared to the levels in early 2025.

Decoupling from China: Success or Financial Burden?

The primary aim of the aggressive trade policy was to reduce American reliance on Chinese manufacturing. JPMorgan’s data indicates that this strategy is working, with financial outflows from midsize U.S. firms to China down by around 20% since 2024. However, this shift has resulted in American businesses moving their sourcing to other regions such as Southeast Asia, Japan, and India, leading to what is termed “import substitution”. This approach has brought about significant costs for these firms, illustrating the financial burden of decoupling from China.

The Middle Market Squeeze

The report highlights how, despite stable trade volumes, the financial health of these midsize firms may be at risk. These companies are uniquely vulnerable; while they are large enough to be on the regulatory radar, they lack the scale to absorb sustained cost increases compared to multinational corporations. The policy has intensified the financial stress on existing importers, as the majority of the surge in government revenue came from firms already subject to tariffs.

The report also points out that the removal of the de minimis exemption in 2025, which previously allowed shipments under $800 to enter duty-free, has likely added to the rising costs, hitting smaller importers hard.

Resilience or Delayed Financial Pain?

Despite the tripling of tax bills, international activity by these firms has not collapsed. While international payments remained stable throughout 2025, this stability might not reveal the whole picture. The report warns that many firms may be absorbing the costs in the short term while seeking cheaper alternatives, and the full impact of the trade policy changes may only become apparent after a significant delay.

In conclusion, while midsize American businesses are successfully decoupling from China, they are doing so at a historic financial cost.

Information in this article was gathered by Fortune journalists using generative AI as a research tool. All information was verified by an editor before publishing.