In Q1 2025, US businesses filed for bankruptcy at a record pace since the 2008 crisis. There were 188 big business filings—more than 139 in the corresponding period last year. This huge increase shows the effect of the Trump tariffs 2025 on US bankruptcies. President Donald Trump’s blanket import tariffs—beginning at 10% on all items and rising to 145% on Chinese imports—have sent business expenses significantly higher. Companies already reeling from high interest rates now must deal with more burdensome operating costs. Consumer brands such as Forever 21, 23andMe, and Hooters have been most affected. Trump claims his tariffs shield American jobs, but increased bankruptcies indicate underlying economic distress.
Bankruptcy Surge Amid Tariff Shock
The 188 corporate bankruptcies in Q1 2025 were the worst quarter since 2010, reports S&P Global Market Intelligence. Forever 21’s US owner, Mitel Networks, Village Roadshow, 23andMe, and Hooters of America filed for bankruptcy in March alone. Analysts attribute increasing financial strain, exacerbated by new tariffs and the difficulty of refinancing debt at higher interest rates.
Tariffs Fuel Economic Strain
Trump’s “reciprocal tariffs” policy, initiated on April 2, set a minimum 10% tariff on all imports. Beginning April 9, products from 57 countries incurred even higher duties. While the US deferred the increase for 90 days for most countries—except China—the new floor is significantly higher than previous levels. Economists caution that these tariffs increase the cost of production and consumer prices. That, in turn, dampens demand, reduces investment, and depresses confidence.
Consumer Segments Feel the Pain
Retail and hospitality companies, already weak, are now crumbling under the pressure. Increased cost of imported products has resulted in price increases, dampening consumption. Thinly capitalized and high-debt brands can’t bear the additional burden. Consequently, the consumer sector has witnessed a spate of bankruptcies and business shutdowns.
Bigger Trouble for the Economy
This surge of bankruptcies can pull down the entire economy. It threatens jobs, discourages consumer spending, and slows business activity. Globally, the tariffs discombobulate supply chains and strain trade relationships. Though Trump seeks to shield American industries, the repercussions demonstrate the cost of trade brinksmanship.
The Trump tariffs might be assertive, but the rising bankruptcies indicate that businesses—and the economy—are paying the cost.