The rising tide of tariffs is hitting America’s small businesses hard, threatening their very survival in an already challenging economic landscape. Small enterprises across the nation face mounting pressure as international trade tensions escalate and proposed new tariff policies loom on the horizon.
Yair Reiner, founder of Frywall, a kitchen splatter guard manufacturing company, recently shared his concerns about how tariffs have affected his business. “When the first wave of tariffs hit in 2018, our production costs jumped almost overnight. We’ve been struggling to maintain our margins ever since,” Reiner explained during our interview at his modest New York office. His company, which sources materials from overseas suppliers, has seen production costs increase by nearly 25% due to tariff-related expenses.
This scenario isn’t unique to Frywall. According to a recent Federal Reserve Bank of Atlanta survey, approximately 37% of small businesses reported significant negative impacts from tariffs implemented over the past three years. The financial strain has forced many to make difficult decisions about pricing, staffing, and expansion plans.
The U.S. Chamber of Commerce reports that American businesses paid a record $6.8 billion in tariffs in October 2023 alone. Small businesses bear a disproportionate burden of these costs, as they lack the resources and flexibility of larger corporations to absorb or mitigate such expenses.
“Unlike major corporations, we don’t have the capital to suddenly relocate our manufacturing or find alternative supply chains,” notes Jennifer Blackburn, owner of Willow Creek Designs, a home décor business in Portland. “When tariffs hit our imported raw materials, we either raise prices and risk losing customers or eat the costs and watch our profits disappear.”
The impact extends beyond just the direct cost of tariffs. Supply chain disruptions caused by shifting trade relationships have created unpredictability that particularly hurts small businesses operating with thin margins and limited inventory space. Many small business owners report spending additional hours each week managing tariff-related complications instead of focusing on growth and innovation.
Research from the Peterson Institute for International Economics suggests that the average American household pays an additional $831 annually due to recent tariffs. For small businesses serving price-sensitive markets, this decrease in consumer purchasing power translates to declining sales volumes, creating a double-bind of higher costs and lower revenues.
Some small businesses have attempted to pivot by seeking domestic suppliers. However, this approach comes with its own challenges. “American-made alternatives often cost 30-40% more, if they exist at all,” explains Marcus Jenkins, who runs a specialty electronics components distributor in Arizona. “Our customers simply won’t accept that kind of price increase in a competitive market.”
The uncertainty surrounding future tariff policies compounds these difficulties. With various proposals for new or expanded tariffs in discussion, small business owners struggle to make long-term plans or investments. A survey by the National Federation of Independent Business found that 41% of small business owners have delayed expansion plans due to uncertainty about trade policies.
Economic data reveals the broader impact of this uncertainty. Small business formation rates have declined 12% in sectors most affected by tariffs compared to other industries, according to analysis from the Economic Innovation Group. This suggests that tariffs are not only threatening existing small businesses but potentially preventing new ones from emerging.
Industry experts point out that tariffs often fail to achieve their intended goals while creating unintended consequences for small businesses. “The idea that tariffs will bring manufacturing jobs back to the U.S. overlooks the complex reality of global supply chains,” explains Dr. Sandra Morrison, an economics professor at Georgetown University. “Instead, we’re seeing small businesses—the backbone of local economies—bearing the brunt of these policies.”
Some regions are particularly vulnerable. In states with high concentrations of small manufacturers and retailers
