President Donald Trump’s trade policies have had a significant impact on small businesses across the United States. All of these policies have skyrocketed costs and shattered decades-long supply chains. New negotiations between the U.S. and China have proved fruitful, slashing tariffs from 145% to 30% — at least for the next 90 days. Many small business owners aren’t buying this as a big enough, or even the right change, for relief. The consequences of these damaging tariffs still loom overhead, threatening their further growth and sustainability.
Small businesses, such as Francine Farkas Sears’ consulting firm, are a vital part of that competitive space. They design business bags for women and sewing kits for organizations like the Girl Scouts of America and the Red Cross, but today they face an uncertain fate. As the first American business woman officially invited to China after President Richard Nixon opened trade relations 50 years ago, Sears has witnessed significant alterations in trade and commerce. These changes have come full circle to put her out of business.
Katharine Burke’s new startup, Purryfuls, specializes in producing self-care plushes that help overworked Millennials and Gen Zers chill out. They are now running into second-layer manufacturing delays. Burke’s business model is in upheaval due to the tariff-related chaos. Now products are scheduled to ship from China the end of May, only compounding the chaos.
Tariffs Stifle Growth and Expansion
The tariffs have quickly crushed the growth and expansion plans of thousands of small businesses in every manufacturing sector. Beth Fynbo Benike, owner Busy Baby, was recently quoted an outrageous $230,000 for her next shipment of baby products. Tariffs were a major contributor to increasing that price. This huge financial burden puts the company’s future at risk. Even more concerning is that the company has scaled up to several hundred Walmart and Target stores.
For Fynbo Benike, the confusion that has turned into a signature trait to guide her business through these rough waters.
“I would say it’s more and more (uncertain) and different and stronger,” – Beth Fynbo Benike
This steep and shifting tariff wall leads to tremendous volatility. This creates an environment that is difficult for companies such as Busy Baby to build sustainable, long-term strategies around. As Fynbo Benike aptly stated, “Because our administration is known to make sudden and drastic changes out of nowhere, and now that is happening in both directions.”
Supply Chain Disruption
The new rules and regulations around customs and imports have many small business owners reeling and wondering what’s next. Every day, Francine Farkas Sears’ customs broker is reviewing hundreds of tariff codes. This task is crucial to figuring out what import duties her company will owe. This complicated bureaucratic process just creates more stress on entrepreneurs who already have to navigate costs that are in flux.
“These families are scraping by to join the Girl Scouts for their daughters, and they can buy that cart now for $39.” She pointed out that if she were to manufacture the products in the U.S., the price would increase to about $200 per unit.
This disruption dealing business owners such as Sears a body blow directly to the bank account. Even worse, it jeopardizes their decades-long relationships with their few remaining suppliers. Unsustainable business practices may result from these consequences. They endanger the future of firms who’ve earned their prosperity on generations’ worth of goodwill and partnerships.
Ongoing Challenges for Small Business Owners
On the surface, the recent drop in tariff levels from 145% to 30% seems like an improvement. At the same time, it still dumps an unmanageable burden on small business. Entrepreneurs report that even with the reduced rate, they continue to face serious capital pain points. Burke’s fears echo some of the deepest concerns of small business owners, as she often found herself looking back at what should have been a booming summer.
“My (company’s) survival was in question all of April,” – Katharine Burke
For Busy Baby, Fynbo Benike remarked on the dire situation by stating, “Well, we might as well just make a lunch date, because I won’t have a business; it’s that serious.” Tariffs hit harder than in the pocketbook. They profoundly impact entrepreneurs. Who can blame business owners for skipping the pep rally? For one, these changes take an emotional toll on entrepreneurs.
She further elaborated on the impact of tariffs on her industry: “It’s an industry that we don’t produce today here.” TARIFF RATE STABILITY A key foundation for international manufacturing is predictable tariff rates. When those rates change, they introduce a huge amount of volatility that can render future planning almost impossible.
Fynbo Benike’s frustration is palpable as she discusses the continued burden of tariffs: “That still sucks, by the way. That sucks for any small business owner … It’s still going to cost me $48,000 more than this shipment would’ve cost me two months ago.” Her frustrations are indicative of a larger trend among small businesses trying to get through an environment where the ground feels like it’s constantly shifting.