The article details the challenges faced by American small businesses as they grapple with the financial impact of new tariffs instituted by President Trump on virtually all imports. Many shop owners across the United States perceive themselves as indirect victims in the ongoing global trade war.
Sarah Wells, owner of a business named Sarah Wells Bags that specializes in products for new mothers, including breast-pump backpacks, is assessing the impact of these tariffs on her operation. This year, her company has navigated two tariff increases, which coincided with a shipment arriving from China. As her shipment was being loaded in February, the U.S. government raised tariffs on Chinese imports by 10%. The tariffs increased by another 10% by the time her order arrived in March, requiring her to pay an unexpected $15,000 to clear her goods through customs.
With the latest tariff increase raising total tariffs on Chinese imports to 54%, Wells faces significant impacts on her profit margins. She contemplates raising product prices to address the increased costs but is concerned about potential consumer backlash. As a result, she is considering strategies to cut costs, such as reducing orders, pausing hiring, and halting new product development.
The National Retail Federation had forecasted modest retail growth this year, projecting sales to grow by 2.7% to 3.7%. However, these projections were made before the full extent of the new tariffs was understood. The group now acknowledges the difficulty in predicting the tariffs’ impact on prices and consumer spending.
Large retailers, such as Walmart, exert pressure on their foreign suppliers to provide discounts to counterbalance the tariffs’ effects. Smaller retailers, lacking the negotiating power of larger rivals, face a more challenging situation. Many are considering measures such as reducing product selections, freezing hiring, and halting expansion efforts.
Jessica Bettencourt, owner of Klem’s general store in Massachusetts, reflects on the challenge of balancing need and affordability for customers. While she prefers to stock U.S.-made products, financial practicality often dictates offering more affordable imported alternatives. An example is work boots, where American-made options cost $400, compared to $200 for imports.
The article highlights the broader context of the U.S. manufacturing landscape, where sourcing domestically often involves significantly higher costs. Entrepreneurs like Wells and Rozalynn Goodwin, who has encountered similar challenges while manufacturing hair accessories, face stark cost disparities when considering domestic production.
This scenario underscores the difficulties small business owners face in adapting to sweeping economic policies largely beyond their control. The growing burden of tariffs is prompting many to contemplate measures of survival rather than expansion.
