Corporate bankruptcies have surged to levels reminiscent of the Great Recession, driven by inflation, high interest rates, and stringent tariffs, with projections indicating that by 2025, hundreds of firms could face insolvency, as detailed in a recent report.
As of November, over 717 U.S. companies have filed for bankruptcy, marking a 14% increase from the previous year and the highest number since 2010, according to S&P Global Market Intelligence.
Notable companies that declared bankruptcy last year include pharmacy chain Rite Aid, genetic testing firm 23&Me, fast-casual restaurant chain Hooters, and the low-cost airline Spirit Airlines.
The increasing bankruptcy rates are attributed to relentless cost pressures, limited access to credit, and the impact of President Trump’s trade policies, which have raised the costs of imported raw materials and disrupted global supply chains.
Interestingly, this time, the most affected sectors seem to be industrial companies, a shift from previous patterns where consumer retailers dominated bankruptcy cases, as noted by the Washington Post.
Manufacturers, construction firms, and trucking companies are now the leading sources of bankruptcy filings, a sharp contrast to recent years.
Federal statistics indicate that the manufacturing sector has lost more than 70,000 jobs, even with the tariffs expected to be implemented over a year ending in November, contradicting Trump’s claims of a potential revival in domestic production.
Economists point out that companies reliant on imports are caught in a squeeze—bearing the brunt of the highest tariffs seen in decades while struggling to fully pass on costs to consumers.
In addition, companies that sell consumer goods follow closely behind in bankruptcy filings, reflecting that many Americans are tightening their budgets amidst ongoing inflation. Retailers specializing in fashion and home decor are particularly susceptible as consumers prioritize essential expenses like groceries and utilities.
The types of filings include both Chapter 11 reorganizations and Chapter 7 liquidations. Chapter 11 allows businesses to restructure while operating, whereas Chapter 7 often leads to ceasing operations entirely and selling off assets.
Experts have observed that many firms consciously maintain pricing to retain customers, even at the cost of draining resources. Jeffrey Sonnenfeld, a Yale professor, notes that “companies are fully aware of the affordability crisis facing average Americans,” indicating that those with pricing power will eventually pass on costs, while others may be forced out of the market.
Notably, there has been an uptick in “megabankruptcies,” which involve firms with assets exceeding $1 billion. There were 17 such filings in the first half of 2025, the highest observed in six months since the onset of the 2020 COVID-19 pandemic.
This trend highlights challenges faced by consumer brands, with inflation and high interest rates severely dampening demand and access to financing.
Meanwhile, the industrial sector seems to be at the forefront of these challenges. Tariffs on steel, parts, and energy equipment are impacting manufacturers and suppliers, and shifts in policy are affecting some areas of renewable energy.
For instance, in November, Louisiana-based solar power installer PosiGen filed for Chapter 11, citing the withdrawal of federal clean energy incentives and steep tariffs on imported solar equipment.
According to analysis from a Michigan State University professor, the effective tariff rate on imported solar cells has surged from under 5% last year to around 20% since May, burdening small and medium-sized businesses with nearly $70 million a month in tariffs.
“This situation puts immense pressure on cash flow, especially for smaller importers,” the professor remarked. “Coupled with cuts to federal incentives, it creates a perfect storm for rising bankruptcy rates.”
Transport companies are also feeling the heat. Electric truck manufacturer Nikola filed for Chapter 11 in February, facing challenges in scaling production and absorbing substantial costs related to battery recalls, alongside a hefty fine from the SEC.
Meanwhile, Spirit Airlines filed for bankruptcy for the second time in under a year, and Florida’s private jet firm VeriJet is entering liquidation.
