Tariffs ‘Appalling and Hard to Deal With’ for Small Businesses

While Wall Street rejoiced at the U.S.-China tariff truce, small businesses have less to celebrate.

As The New York Times (NYT) reported Tuesday (May 27), these enterprises are struggling even after a drop in tariffs on Chinese imports from 145% to 30%.

“Six weeks ago, 30 percent would have shocked the world and been appalling and hard to deal with — and it is now,” said Robby Ringer, co-founder of Bivo, a Vermont-based company that makes and sells stainless steel water bottles.

The report notes that the tariffs on the company’s bottles are higher than 30% because of the material they are made from and how they are classified by customs officials. For insulated bottles, Bivo pays a 47% levy, with uninsulated bottles tariffed at 37%.

“It’s still a massive impact to the cash, and it still requires reworking a whole new strategy,” said Ringer, whose company will likely see sales fall 30% due to the tariffs.

Ebehi Iyoha, an assistant professor at Harvard Business School, told the NYT that tariffs pose a greater risk to smaller businesses, which usually don’t have the financial reserves to endure economic problems or the ability to force suppliers to reduce prices.

“We should generally expect small businesses to be more vulnerable to trade shocks than large businesses,” Professor Iyoha said.

Earlier this month, the National Federation of Independent Businesses issued a report that showed a decline in small business optimism driven in part by the tariffs.

“Very few small businesses export their goods and services, but millions acquire imported goods as inputs to their operations, and those supply chains are currently at risk,” the report said. “Tariff policy is suddenly and dramatically changing relative prices (costs), and relative prices drive all decisions. Uncertainty remains elevated and thus caution clouds spending, hiring and investing decisions.”

The NFIB’s findings are in keeping with research by PYMNTS Intelligence research showing that one-fifth of American small to medium-sized businesses (SMBs) are concerned they will not survive the next five years because of the tariffs.

“For SMBs, tariffs aren’t just a line item; they’re an existential threat,” PYMNTS wrote last month. “Prices for goods and services climbed to their steepest rate in over a year this month, with tariffs fueling an especially sharp increase in prices of manufactured goods. SMBs account for around one-third of total imports to the United States.”

And it’s not only smaller businesses feeling tariff-related headaches. Walmart’s CEO said recently that the massive retailer was not able to “absorb all the pressure” from the tariffs.

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