President Donald Trump’s return to office shook global trade with new and higher tariffs, initially targeting Chinese imports and quickly expanding to goods from nearly every country.
Rising Costs Hit Small Businesses Hard
For many small businesses like Jared Hendricks’ Utah-based Village Lighting Company, the tariffs have been “an absolute nightmare.” Hendricks took out a $1.5 million loan to cover unexpected cost jumps, as tariffs on most goods entering the U.S. have reached at least 10% since April.
Larger tariffs are set to begin on August 1, following a pause on some of Trump’s more aggressive tariff plans. Recently, the administration sent letters to several countries announcing planned tariffs while negotiating “framework” agreements with key partners like the European Union and Japan. These agreements leave some issues unresolved but impose levies previously considered unthinkable.
Currently, U.S. tariffs range from 10% to 50%, a stark rise from the sub-2.5% average at the start of the year. While Trump calls the measures “unbelievable” and credits them with revitalizing U.S. manufacturing, opening overseas markets, and generating record tariff revenue exceeding $100 billion this fiscal year, critics highlight the toll on businesses and consumers.
Small and mid-sized companies alike are feeling the strain. Hendricks, whose firm sells Christmas lights mostly made in Southeast Asia, faces shipment delays and rising costs amid an off-season cash crunch.
General Motors revealed it paid over $1 billion in tariffs from April through June despite exemptions on certain parts. Tesla incurred an extra $300 million in tariff costs. Toymakers Hasbro and Mattel lowered sales forecasts, expecting tens of millions in tariff-related expenses. Aerospace giant RTX anticipates $500 million in costs.
Though industries like steel welcome protections and some labor unions support the tariffs, economists warn that increased tariffs could slow U.S. economic growth by squeezing profits and forcing companies to either raise prices or cut investment.
Shifting Strategies and Consumer Impacts
Waza, a Los Angeles retailer specializing in Japan-made goods, raised prices by 10-20%. Executive Vice President Anri Seki described the trade outcomes as “disappointing” and “unfair,” noting that ongoing uncertainty has pushed the company to consider expanding beyond U.S. borders.
Goldman Sachs projects tariffs will reduce U.S. growth by about 1 percentage point this year. Yet, stock markets have rallied, and consumer confidence remains relatively strong despite early worries.
Yale economist Ernie Tedeschi cautions that the economy is in a “middle ground” — not thriving, but not in recession. Wells Fargo’s Tim Quinlan warns of signs like reduced discretionary spending, which often precede recessions, though he stops short of predicting an imminent downturn.
As stockpiles of pre-tariff goods run low and the August 1 deadline nears, businesses brace for more significant impacts. Julie Robbins, CEO of Ohio-based Earthquaker Devices, says tariffs and trade policies are the “largest threat” to her company’s future, noting 40% sales losses outside the U.S. amid growing backlash.
Author’s Opinion
While tariffs aim to protect domestic industries, they often shift the financial burden onto small businesses and everyday consumers. The rising costs squeeze profits, disrupt supply chains, and can slow economic growth. Policymakers should carefully balance protectionist measures with the risks they pose to the broader economy, ensuring that efforts to support manufacturing do not inadvertently stifle innovation or harm competitiveness.
Featured image credit: Markus Winkler via Unsplash
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