Former U.S. President Donald Trump’s decision to impose tariffs on foreign imports to strengthen America’s economy appears to have had unintended consequences. Since the announcement of a 10% tariff in april 2025, bankruptcies among U.S. companies have surged, raising alarm over the health of American businesses.
In July alone, 71 major companies declared bankruptcy—the highest monthly figure since July 2020, when the pandemic was at its peak. So far in 2025, 446 U.S. companies have filed for bankruptcy, a 12% increase compared to the pandemic year of 2020. Notable casualties include well-known consumer brands such as Forever 21, Joann’s, Rite Aid, party City, and Claire’s. The trend is particularly worrying given that bankruptcies began to spike right after Trump’s tariff announcement in april, with 63 companies collapsing in june and 371 in the first half of the year alone.
The impact has been most severe on small-cap companies, traditionally the backbone of the American economy. By the end of 2024, 43% of Russell 2000 firms were in the red, worse than the 41% recorded during the 2008 financial crisis. With effective U.S. tariffs now standing at 17.3%—the highest level since 1935— industrials, consumer discretionary, healthcare, retail, and IT firms have borne the brunt. According to data, bankruptcies were spread across sectors: 70 industrial firms, 61 consumer discretionary companies, 32 healthcare players, and 22 in consumer staples, among others.
The fallout is not limited to bankruptcies alone. Inflation and unemployment are both on the rise. In July, 11% of small businesses reported “very poor sales,” a red flag for potential layoffs. Given that small businesses employ 62.3 million people, or nearly 46% of the U.S. workforce, the ripple effects could be severe. youth unemployment is already flashing warning signs: among Americans aged 20–24, the jobless rate averaged 8.1% over the past three months, the highest in four years and comparable to levels seen during the 2008 financial crisis.
Trump’s protectionist policies, pitched as a revival of American industry, are instead reviving memories of past downturns. With tariffs at a 90-year high and economic indicators sliding, critics warn that this trade war could leave American workers and businesses paying the steepest price.
In July alone, 71 major companies declared bankruptcy—the highest monthly figure since July 2020, when the pandemic was at its peak. So far in 2025, 446 U.S. companies have filed for bankruptcy, a 12% increase compared to the pandemic year of 2020. Notable casualties include well-known consumer brands such as Forever 21, Joann’s, Rite Aid, party City, and Claire’s. The trend is particularly worrying given that bankruptcies began to spike right after Trump’s tariff announcement in april, with 63 companies collapsing in june and 371 in the first half of the year alone.
The impact has been most severe on small-cap companies, traditionally the backbone of the American economy. By the end of 2024, 43% of Russell 2000 firms were in the red, worse than the 41% recorded during the 2008 financial crisis. With effective U.S. tariffs now standing at 17.3%—the highest level since 1935— industrials, consumer discretionary, healthcare, retail, and IT firms have borne the brunt. According to data, bankruptcies were spread across sectors: 70 industrial firms, 61 consumer discretionary companies, 32 healthcare players, and 22 in consumer staples, among others.
The fallout is not limited to bankruptcies alone. Inflation and unemployment are both on the rise. In July, 11% of small businesses reported “very poor sales,” a red flag for potential layoffs. Given that small businesses employ 62.3 million people, or nearly 46% of the U.S. workforce, the ripple effects could be severe. youth unemployment is already flashing warning signs: among Americans aged 20–24, the jobless rate averaged 8.1% over the past three months, the highest in four years and comparable to levels seen during the 2008 financial crisis.
Trump’s protectionist policies, pitched as a revival of American industry, are instead reviving memories of past downturns. With tariffs at a 90-year high and economic indicators sliding, critics warn that this trade war could leave American workers and businesses paying the steepest price.
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