American businesses are caught in the middle and are already dealing with an untenable situation where increasing tariffs further complicate our country’s trade relationships. A tariff, which is simply a tax the government imposes on products that are brought into the country, is paid by the importing company directly to the federal treasury. This import tax is automatically levied as a percent of the cost of the good that the importer sends to the foreign seller. The United States already has heavily used tariffs on countries like China, Mexico and Canada. As implemented, the result is that small businesses are dealing with increasing costs and confusion.
As a result of retaliatory moves by China, tariffs on Chinese imports have jumped to an all-time high of 145%. To make matters worse, China has responded in kind, slapping a 125% tariff on American exports, punishing American manufacturers. A recent cost-impact survey by the US National Small Business Advocate flew in 65,000 members. Over 3,800 of them identified themselves as small businesses, and many expressed apprehension regarding the tariffs. So it’s not surprising that about one-third of those surveyed said they were “very concerned” about the financial impact.
The pill of tariffs has been particularly hard to swallow for the little guys – small businesses. Ken Li, owner of K. K. Discount Store, an NYC Chinatown establishment, experienced a 90% decrease in sales virtually overnight. In response, he’s had to increase prices himself. Rick Huether of the Independent Can Company in Maryland is finding life pretty difficult right now. That’s the uncertainty that he goes through with every tariff announcement as he continues to import steel tinplate from Germany.
Economic Ripple Effects
In the past, tariffs have been responsible for rising consumer prices, since businesses usually force product price increases onto their consumers. That trend is reinforced by a survey showing the difficulties of small business owners across America. For most, that cost burden imposed by tariffs means stress and worry.
Rick Huether shared his struggles, saying, “I wake up at three or four o’clock in the morning and start trying to solve problems in my brain.” That’s a loss of sleepless nights that too many business owners have experienced in the wake of the unpredictability that’s characterized U.S. trade relations.
And as has been noted, the tariffs impact US retirees whose retirement funds are invested in US stocks more than disproportionately. Tariff announcements have sparked serious stock market turmoil. Consequently, savers have lost large portions of their retirement savings, as much as 15% to 20% in some cases. The future uncertainty about what trade policies might look like only raises the stakes for workers who depend on those investments for their jobs.
Voices from the Front Lines
That apprehension among small business owners tells a bigger story about the overall malaise that’s settling in as we look to the next economic horizon. Ken Li articulated his frustration, stating, “He needs to think about all Americans, not only big companies.” His plea is a stark reminder of what should be government policies to protect the little guy when the storm clouds roll in.
Li further emphasized the importance of nurturing small businesses, saying, “You need to care [about] the small business.” His experience paints a vivid picture of how tariffs go beyond just bottom lines, stressing employees and harming relations with customers.
Jan Hodge, a small business owner with a history of working in various local shops, noted, “You can’t do that anymore. There’s just no employment.” Her comments point to the much more insidious understanding of how macro economic policies can impact job creation in communities all across America.
Navigating Uncertainty
As American businesses prepare for ongoing unpredictability in our country’s trade relations, thousands—if not millions—of small business owners are understandably concerned about their families’ futures. Combined with a rapidly changing tariff landscape, this has created a climate of uncertainty that is felt down the line right down to core operation.
Rick Huether candidly expressed his feelings about the uncertain climate: “We don’t know what’s going on tomorrow.” This sentiment resonates with numerous entrepreneurs who are trying to maintain stability while adapting to changing regulations and market conditions.
Even with these brutal realities weighing on them, business owners are holding out hope. Linda Barton remarked, “Things recovered after the downturn with COVID and I have confidence that the market will upturn.” Her positive attitude comes from a belief that innovation and flexibility will carry companies through this influx of regulation.
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