JPMorgan analysis finds Trump’s tariffs are working on China—at a huge cost to small American business

Fortune

by Nick Lichtenberg

February 19, 2026

AI-Generated Deep Dive Summary

JPMorgan Chase Institute’s analysis reveals that while Trump’s tariffs have successfully reduced midsize U.S. businesses’ reliance on Chinese suppliers by about 20% since 2024, the cost has been substantial. Tariff payments tripled after April 2025, and companies are struggling to find cheaper alternatives in other regions like Southeast Asia, Japan, and India. This shift, known as import substitution, highlights a costly adaptation process for American firms. Midsize businesses are particularly vulnerable due to their inability to absorb sustained cost increases compared to larger corporations. The removal of the de minimis exemption and higher tariffs have exacerbated financial pressures, disproportionately affecting existing importers rather than spreading costs across new players. While international payments remain stable, the long-term financial health of these companies is uncertain. The analysis suggests that while businesses are gradually reallocating their supply chains, they may be absorbing short-term costs while seeking alternatives. This resilience could mask deeper issues, as the full impact of trade policy changes might only become apparent later. For now, midsize U.S. firms are successfully reducing ties with China but at a significant economic cost. This matters to businesses and investors because it underscores the unintended consequences of protectionist policies on smaller companies. The data raises questions about the sustainability of current trade strategies and their long-term effects on global supply chains and business resilience.

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Originally published on Fortune on 2/19/2026