U.S. Tariffs Exceed $35 Billion, But Businesses Adapt too ‘New Normal’
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The escalating cost of U.S. tariffs is now projected to exceed $35 billion, a figure that continues to rise as third-quarter 2025 earnings reports are released. While the initial shockwaves of trade policy have subsided, the financial strain remains notable, though increasingly factored into corporate planning.
Initial Impact and Corporate Losses
Even before third-quarter 2025 earnings started rolling in, global businesses had warned of over $35 billion in costs from U.S. tariffs. That estimate is only rising as Q3 reporting hits the newsstands. Tesla alone reported a $400 million loss for the most recent quarter attributable to tariff-related costs. Despite assembling vehicles within the United States, the electric car manufacturer still faces tariffs on imported raw materials.
However, Tesla’s losses pale in comparison to the $9.5 billion full-year impairment forecast by Toyota earlier this summer, stemming from tariffs, increased input costs, and broader supply chain disruptions. General motors (GM) offered a more optimistic outlook during its Q3 earnings call,projecting a tariff impact of $3.5 billion to $4.5 billion, a reduction from the previously estimated $4 billion to $5 billion.
Shifting Landscape and Bilateral Relief
For many firms across various sectors, worst-case scenarios have been revised downward, largely due to adjustments in sourcing and, in certain specific cases, bilateral trade agreements. Nike, for example, has diversified its manufacturing base, reducing its reliance on countries that lack a trade agreement with the U.S. Similarly, Adidas has raised its 2025 earnings forecast, with executives expressing confidence in their ability to mitigate the impact of U.S. tariffs.
However, not all companies are experiencing the same level of success. Texas Instruments forecasted revenue and profits below Wall Street estimates, leading to a 6% stock decline on Wednesday (Oct.22) as leadership expressed caution regarding the semiconductor industry’s recovery.
Three Emerging Themes in Tariff Management
The consensus among multinational corporations is that the tariff environment has evolved from a crisis event into a predictable business variable. From a strategic viewpoint, three key themes are emerging:
- Normalization: Tariff costs are increasingly integrated into planning cycles and supply chain design, rather than being treated as exceptional expenses.
- risk Reallocation: The burden of trade policy is shifting. Larger firms can absorb or hedge against tariff costs, while smaller firms and consumers are bearing a greater share of the financial impact. Potential benefits to domestic advanced manufacturing may not fully offset losses in other sectors.
- Policy volatility: Despite signs of stabilization, the risk of renewed trade escalation remains, necessitating flexibility in sourcing, pricing, and portfolio decisions.
Impact on Consumers and small Businesses
The impact of tariffs extends beyond large corporations. An independent analysis by the Budget Lab at Yale revealed that the average effective tariff rate is at its highest level since the 1930s, negatively impacting household incomes and GDP.
the situation is particularly challenging for small- to medium-sized businesses (SMBs). Nearly 1 in 5 SMBs are pessimistic about their chances of survival over the next two years, according to a recent PYMNTS Intelligence report, “Brewing Storm: Why 1 in 5 Smaller businesses Without Financing Fear They May Not Survive Tariffs.” A separate PYMNTS Intelligence eBook, “Data Book: Tariffs Drive Price Pressures as SMBs Weigh Supply Chain Overhauls,” found that roughly 7 in 10 SMBs are well-informed about current and looming tariffs. Sixty-two percent anticipate product shortages, and 66% foresee higher raw material costs.
SMBs, with their typically thinner margins, limited supply chain flexibility, and working capital constraints, are more vulnerable to tariff volatility, perhaps leading to delayed investments, workforce reductions, or even business closures.While larger firms can adapt, smaller companies face significant challenges.
Ultimately, the tariff environment has transitioned from a disruptive force to an ongoing variable in the global business landscape, demanding adaptability and strategic foresight from companies of all sizes.
