Small businesses struggle as Trump's tariffs on China take effect

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The Trump administration's move to levy a 10% tariff on all imports from China is inducing broad uncertainty among small business owners, most of whom source their production from Chinese factories. Small business owners from various industries are finding it challenging to deal with increased costs, possible supply chain disruptions, and the risk of even higher tariffs in the future, according to a report in The New York Times.

Uncertainty looms for small businesses

Erica Campbell, who runs Be a Heart, a Phoenix-based Catholic gifts company, is expecting a shipment from China of thousands of religious items. Though her latest order was placed before the tariffs increased, she's worried about how higher import tariffs in the future will affect her business. Sales hit $2 million a year, and she worries that increasing tariffs will make her items out of reach for consumers.

“I can’t figure out what is going to happen,” Campbell said. “I am on high alert.”

Trump's tariffs against China have put millions of small businesses in disarray. Numerous American businesses create their products here in the United States but make them in China because of the nation's cost-effective and high-quality production aspects. From greeting cards to outdoor shoes and specialty electronics, companies from a variety of industries are racing to re-examine their supply chain as prices increase.

Small businesses suffer the most from tariffs

Even though Trump is claiming that China is being hardest hit by the tariffs, the majority of the small business community contends that the added expense falls on American corporations. When tariff rates rise 10%, firms have to swallow the extra expense or charge higher prices to pass it along.

Bill Keefe and Juli Lee, owners of Julianna Rae, a luxury silk sleepwear brand, have already felt the impact. Their silk pyjamas and robes are all made in China, and they have had to weigh delaying shipments in hopes Trump changes his mind. But doing so threatens to be out of stock at crucial sales times like Christmas and Valentine's Day.

Finding alternatives isn't simple

For most companies, relocating manufacturing to the US or elsewhere is not an option. The best equipment, labour skills, and affordable production still remain in China, so moving is costly and time-consuming. Keefe clarified, "The best expertise, the capability to make quality products at a good price, is in China."

Chris Miksovsky, the owner of Humangear, a maker of outdoor and travel accessories, tried to venture into domestic production. He contacted six US manufacturers but got no response or slow responses that amounted to nothing. He concluded that the US both has no capacity and lacks interest in making many of the products that firms currently import from China.

Dual tariffs make matters more complicated

For some companies, tariffs on raw materials as well as final products are imposing a double whammy. Shawn Ernst, co-owner of Snap Supply, a Chicago-based appliance repair parts business, had already shifted his supply chain to Mexico to sidestep tariffs on imports from China. Now, with additional tariffs on steel and aluminium and possible tariffs on Mexican imports, his company is experiencing a tight squeeze on finances. He fears the additional costs could make his products uncompetitive against Chinese sellers on Amazon, forcing him to raise prices or lay off employees.

“We’ve never felt so affected by something a president has done,” Ernst said. “It’s so frustrating to see what is actually happening.”

The broader economic impact

With another round of tariffs on the horizon, small business owners are at a loss for what to do next. For businesses like Campbell's, which retail non-essential items, price increases mean alienating customers already stretched by higher living expenses.

"I don't think people get what that looks like," Campbell said. "Not only for my business but in life—how are we going to be able to afford this because everything comes from China?"

With uncertainty on the rise, small businesses nationwide are left to deal with an uncertain trade environment without knowing how to safeguard their businesses against rising tariffs.