While aggressive trade policies implemented in 2025 succeeded in driving a huge wedge between mid-sized U.S. companies and Chinese suppliers, the decoupling came at staggering costs for U.S. businesses, according to a new analysis from JPMorgan Chase Institute.
The report, titled “Tracking International Payments: How Are Midsize Businesses Reacting to Tariffs?” paints a picture of a business sector that is buckling but not collapsing under historical pressures. The cost of imported goods has soared, with U.S. companies bearing the brunt, according to JPMorgan Chase data on outflows from companies with revenue between $10 million and $1 billion.
While these companies race to find alternative sources of Chinese manufacturing, they pay a high price for imported products. After the tariff increase and the new general tariff were implemented in April 2025, the monthly tariff payments of these medium-sized enterprises tripled compared to the levels at the beginning of 2025.
If the main goal of trade policy is to reduce U.S. dependence on Chinese manufacturing, the banking giant’s data suggests that strategy is working. Since 2024, outflows from U.S. mid-sized companies to China have fallen by about 20%.
However, retreat from China does not mean retreat from the global economy. Rather than fully reshoring operations, American companies appear to be engaging in a costly game of musical chairs.
While payments to China fell, outflows to other regions, notably Southeast Asia, Japan and India, were accelerating, the report found. This evidence points to “import substitution,” in which U.S. companies rush to find alternative suppliers in friendly countries to bypass the toughest tariffs imposed on Beijing.
JPMorgan researchers warned that while trade volumes remained stable, the companies’ financial health could be at risk. Mid-sized companies are particularly vulnerable; they are often too large to attract regulators’ attention, but “lack the scale to absorb ongoing cost increases” compared with large multinationals.
The burden of these new taxes is particularly uneven. While the “general tariffs” announced in April 2025 did cover new businesses that had not previously paid tariffs, JPMorgan’s analysis found that the vast majority of the surge in government revenue came from those businesses that had not paid tariffs. already Pay customs duties. Essentially, the policy exacerbates financial pressures on existing importers rather than spreading costs broadly to new importers.
