Surge in U.S. Corporate Bankruptcies Driven by Tariffs and Economic Pressures

In 2025, corporate bankruptcies in the United States reached their highest level in 15 years, with at least 717 companies filing for Chapter 7 or Chapter 11 bankruptcy through November. This figure represents a 14% increase compared to the same period in 2024, marking the most filings since 2010, the end of the Great Recession. Industries particularly affected include construction, manufacturing, and transportation, sectors that President Donald Trump had aimed to revitalize through his trade policies.

Corporate bankruptcies soar as inflation and tariffs squeeze companies

Economists attribute the spike in bankruptcies to a combination of high tariffs, rising inflation, and increased interest rates. Trump's trade policies, particularly blanket tariffs, have significantly raised costs for import-dependent businesses. For instance, the effective tariff rate on solar imports surged to 20% after May 2025, up from below 5%, placing immense strain on cash flow for smaller importers. Notable bankruptcies included Spirit Airlines and PosiGen, a solar energy company, both of which cited tariffs and reduced federal incentives as critical factors in their financial distress.

Corporate bankruptcies soar as inflation and tariffs squeeze companies

The manufacturing sector alone lost over 70,000 jobs year-over-year by November 2025. Consumer-oriented businesses, especially those selling non-essential goods, also faced challenges as inflation-weary consumers prioritized essential spending. Retailers selling discretionary items, such as fashion and home furnishings, reported significant declines in sales, leading to increased bankruptcy filings. The trend has shifted from consumer retailers dominating bankruptcy courts to industrial companies now accounting for the largest share of new filings.

Corporate bankruptcies soar as inflation and tariffs squeeze companies

President Trump has defended his tariff policies, claiming they are fostering economic growth and national security. He stated, “Tariffs are creating GREAT WEALTH, and unprecedented National Security for the USA,” while asserting that the trade deficit has been significantly reduced. However, critics argue that these claims overlook the broader economic distress faced by many businesses and consumers. David Pakman, a commentator, emphasized that while some sectors thrive, many businesses are “just absorbing the pain” of rising costs.

Bankruptcies Reach A 15-Year Peak In The U.S. The Cause? Tariffs Introduced By ‘A President Who Is The Color Of A Traffic Cone’

Critics of Trump's trade policies highlight the growing economic divide, noting that while some industries, particularly those tied to artificial intelligence, are prospering, many others are struggling to survive. Jeffrey Sonnenfeld, a Yale University professor, pointed out that companies are aware of the affordability crisis facing average Americans and are doing their best to manage costs, but many are unable to sustain operations under current conditions.

Bankruptcies Reach A 15-Year Peak In The U.S. The Cause? Tariffs Introduced By ‘A President Who Is The Color Of A Traffic Cone’

While the overall economic growth rate was reported at 4.3%, economists caution that this figure is misleading. The growth appears concentrated among high-income consumers and corporate investments, failing to reflect the struggles of various industries. The disparity in economic health across sectors raises concerns about the sustainability of this growth and its implications for future bankruptcies.

Bankruptcies Reach A 15-Year Peak In The U.S. The Cause? Tariffs Introduced By ‘A President Who Is The Color Of A Traffic Cone’

As the number of bankruptcies continues to rise, economists warn that the combination of tariffs, inflation, and reduced consumer spending may lead to further financial instability for smaller companies and households into 2026. The ongoing economic pressures suggest that the current wave of bankruptcies may not be a temporary phenomenon but rather a sign of deeper systemic issues within the U.S. economy.

Corporate bankruptcies soar as inflation and tariffs squeeze companies