Struggling Small Businesses Swallowed by Tariff Volatility: "I'm livid that my own administration has dealt this financial blow!"
Revised Article:
In the turbulent world of small businesses, the last few weeks have been a rollercoaster, thanks to President Donald Trump's erratic tariff policies. The whirlwind of tariff announcements, reversals, and legal challenges has left many companies reeling.
The initial confusion came from the stop-and-start nature of these import levies at different levels. Things took a twist when a US court claimed that Trump overstepped his bounds in imposing most of these tariffs. But just a day later, an appeals court halted the previous court's ruling, adding to the confusion. This turbulence has made it hard for some businesses to plan ahead, with many considering altering their product strategies, shifting supply chains, cutting employee hours, or delaying product launches.
Julie Robbins, CEO of Ohio-based guitar pedal maker EarthQuaker Devices, vividly describes the predicament: "My fear is, if this continues, there's going to be like the mass extinction of small businesses."
Trump unleashed blanket tariffs across the globe on April 2 and, since then, his plans have been anything but static. In early April, he imposed a 90-day pause on almost all reciprocal tariffs except China. Then, after lifting total tariffs on Chinese imports to 145%, he announced that smartphones and certain other electronics would be exempt from reciprocal tariffs. The US and China agreed to roll back reciprocal tariffs for 90 days in May. And in late May, he threatened smartphone makers like Apple with 25% tariffs if they don't manufacture their phones in the US. He also postponed levies on imports from the European Union until July 9.
These changes, which can come at any time and via various channels, have made it tough for companies to keep up. Even big brands like Gap are feeling the heat, but smaller companies, with fewer resources, are in an even tougher spot. The National Federation of Independent Business Small Business Optimism Index fell by 1.6 points in April, dipping below the 51-year average for the second consecutive month. William Dunkelberg, the organization's chief economist, cited uncertainty as a "major impediment" for small business owners.
Analyst Jack Leathem of market research firm Canalys summed it up in April: "It's the sort of more smaller, kind of more niche... brands that are going to really, really get hit by this."
Some small business owners have been forced to make tough decisions to weather the tariff storm. EveAnna Manley, who runs Manley Labs, a high-end electronics manufacturer for recording studios, has had to trim her employees' hours by 25%. The reciprocal tariffs imposed by China have been particularly challenging for her, as China has been a significant market for her business. Manley lamented that it took "decades" to secure the best Chinese importers.
Overall, Manley Labs' sales are down more than 19% compared to last year, freezing the company's product development efforts. "It's just a freaking mess right now," she said in late May, before this past week's court rulings on Trump's tariffs. "And I'm so angry that my own government has done this to me."
In such uncertain times, flexibility and diversifying sourcing and procurement strategies are key, says Tala Akhavan, COO of Pietra, a platform that helps brands with sourcing, production, and logistics. That's what Intuition Robotics, which makes a home robot designed for older adults, is doing, according to chief strategy officer Assaf Gad. The company also profits from digital subscription accounts, giving it the flexibility to look into a "Plan B" outside of China for producing the company's hardware. sudden changes in tariff policies haven't really impacted the company's decisions because it's planning for the next nine to 12 months rather than the short term.
The tariff chaos has encouraged Gad to consider expanding Intuition Robotics into international markets: "Maybe this is also a good time to say, 'Let's not put all the eggs in one basket,' and, you know, start looking on other kind of territories that will reduce the risk for us going forward."
However, finding a Plan B isn't always easy. That's the case for Sarah O'Leary, CEO of Willow, which makes wearable breast pumps and accessories. As a medical device company, Willow can't simply shift its manufacturing. The company had to halt exporting one product it produces in China for postpartum recovery at one point because it became too expensive.
The Wednesday ruling aiming to block many tariffs provided some relief, O'Leary acknowledged in a statement, but there's still "so much uncertainty," she added, admitting that "the chaos will persist." Any tariffs, even low ones, would be challenging for a small company like hers to absorb, she said. "We don't build our products with that much margin," she said. "And so, unfortunately, we are in a position where we have to evaluate what we can do to survive in those contexts."
In the current landscape, agility and resourcefulness are crucial for small businesses to thrive.
Enrichment Data:
Small Businesses and Trump's Tariffs
Small business owners have felt the brunt of President Trump's tariff policies, facing increased costs, employment losses, and reduced business confidence. To cope with these challenges, businesses have adopt leaner operations, sought out alternative suppliers, adjusted pricing strategies, and sought expert advice.
| Impact/Strategy | Description ||-------------------------------|-----------------------------------------------------------------------------|| Employment Losses | 3% decline in jobs at small businesses with <10 employees || Price Hikes | 30% of small businesses raised/priced to raise prices || Higher Operational Costs | Increased costs for imported and domestic goods, longer lead times || Reduced Business Confidence | Sharp decline in owners expecting better conditions || Lean Operations/Just-in-Time | Adjusted inventory and staffing to reduce costs || Seeking Alternative Suppliers | Switching to domestic or lower-tariff foreign sources || Expert Advice | Consulting with business advisors and bankers |
- The turbulent tariff policies instituted by President Donald Trump have significantly impacted various industries, particularly small businesses, where increased operational costs, employment losses, and reduced business confidence have been observed.
- In response to these challenges, small businesses have been adopting strategies such as leaner operations, seeking out alternative suppliers, adjusting pricing strategies, and consulting with business advisors and bankers.
- The finance sector has also felt the ripple effects, as small businesses, faced with higher costs and reduced confidence, are seeking funding solutions to aid their transition and survival in this changing business climate. Additionally, the general news and crime-and-justice domains have highlighted the increased instances of corporate fraud and bankruptcy due to these tariff-related financial burdens on small businesses.
