Small businesses from Redmond to Richmond, Roanoke to Rochester, are feeling the pain of skyrocketing tariffs on Chinese imports. Now, they’ve surged to a crippling 145% in just a few short months after former President Donald Trump rained down his “Liberation Day” tariffs. The rapid increase in expenses is putting many small businesses’ livelihoods at stake. One of these businesses buffeted by the storm is Purryfuls, a self-care product brand recently launched by entrepreneur Grove. Burke’s hard work, celebrated by their community during the first week of April, culminated in the past two years. It introduced overwhelming financial burdens as a result of these tariffs.
Burke’s enterprise has fewer than 50 employees. It’s one of thousands of such small enterprises that are the real backbone of the American economy. Together, these companies account for almost half of the U.S. labor force. They are fundamental to creating and sustaining not only America’s jobs, but our nation’s economic prosperity. These hefty tariffs are upending lit supply chains almost overnight. This damaging disruption puts a choke hold on their growth and expansion plans.
In today’s fierce political climate, Burke seemed to double-down on her plushie manufacturing. She designed these anxiety-aiding toys to distract and calm anxious Millennials and Gen Zers. Now, she’s left in the dark as to what those extra expenses will be. Her first production run of 1,000 Purryfuls units is already on its way to the Port of Los Angeles.
Rising Costs and Uncertain Futures
The tariffs have severely affected Burke’s bottom line. She was able to order a full container of goods, which will save the nonprofit almost $230,000 by the time it lands in the United States. It’s the worst it’s ever been. Her U.S.-based packaging supplier—which sources some of its materials from China—has already been forced to raise prices due to the tariffs. Burke is definitely feeling the heat, as she continues down the path with her plan. Now, she is unsure about what her future expenses will be.
I’m not going to walk away from something I’ve invested two years of my life into,” Burke said. It might be in a completely different form in just a few hours or days and I’m looking forward to seeing what comes out. While she’s committed to getting Purryfuls up and running, the uncertainty around tariffs has thrown a shade of uncertainty on her business’s future.
Here’s the rub, as Burke drives home into the bewildering trade policy landscape, modifications for small business are almost non-existent. I’m simply observing, as many turn on their televisions or smartphones these days, tariffs are popping up everywhere. Then they usually get stalled or shelved until eventually re-emerging. It’s just not doable, honestly, for a business to change that fast, especially a small business such as myself,” she said.
Burke’s experience is typical of what small businesses are experiencing across the country. Many are forced to reconsider their production and investment strategies as they navigate fluctuating costs and tariffs while attempting to maintain operations.
The Impact on Employment and Economic Growth
The ripple effects of these tariffs go far beyond any one business. Experts have been cautioning that the financial squeeze will first start to hit investment from smaller firms. That’s a huge reduction that would lead to significantly slower economic growth. I know our chief economist, Gus Faucher, has really stressed the point that small businesses are going to reduce their capital expenditures. This decision would be a substantial self-inflicted economic drag and further compound the damaging effects of the tariffs already imposed.
Small businesses like Burke’s are the lifeblood of local economies, creating 2 out of 3 new jobs and sparking the vast majority of innovation. They’re being hit by increasing prices of imported products and raw materials. This implementation placement could significantly impact their capacity to expand and add new employees. Burke is worried that those tariffs would put Burke’s business out of business before she’s even launched. She’s not alone in worrying about this development.
Burke had a clear passion behind wanting to invest in his business and his future. Let’s say that the hero of our story isn’t so lucky. Even when he can make decisions, he struggles to act because the unknowns of the future paralyze him.
Navigating Uncertainty
As April continues, Burke can’t wait for her first shipment of Purryfuls to arrive. She struggles under the hard truth that her line’s timing comes amid an especially perfect economic storm. For many entrepreneurs, the chaos around tariff policies has created an environment of confusion and fear over what entrepreneurs can expect moving forward for their businesses.
Burke remembers the pace of change as being one of the defining features of the last few months. It first started at 0%, then went up to 20% right away. Then up to 80%, then 125%, and now 145%,” she explained. This huge increase has had a major impact not just on her pricing strategy, but on making it more difficult to plan for future product lines.
Despite these hurdles, Burke remains hopeful. So I’m really hoping that it will change in a few weeks because that’s when [the Purryfuls] come in,” she stated. This decision reaffirms the tenacity and grit of the small business owners who fight tooth and nail for their dreams even when facing overwhelming odds.
Others in the industry share similar sentiments. Melanie Abrantes, another entrepreneur who has felt the impact of the tariff regime, characterized her experience as a chaotic and uncertain one. It’s been really crazy… like one thing changes, like every day, and I have such a hard time tackling that,” she commented.
As these small businesses strive to adapt to an ever-changing environment, they take each day as it comes while hoping for clarity amidst confusion. Their important place as the top job creators and economic stabilizers require some consideration. Policymakers need to rethink the unintended consequences tariff strategies have on small businesses.