I’ve spent the last week talking to small business owners across America, and one thing is crystal clear – the latest round of tariffs in the US-China trade dispute has many of them deeply concerned about survival.
When President Biden announced expanded tariffs on Chinese imports last month, Wall Street analysts quickly calculated the macroeconomic impact. But behind those numbers are real people like Sarah Chen, who runs a small electronics assembly shop in Dayton, Ohio.
“We’re caught in the middle,” Chen told me, gesturing toward stacks of circuit board components that just doubled in price. “I’ve got 23 employees and contracts I can’t renegotiate. Where exactly is this money supposed to come from?”
This sentiment echoes throughout America’s small business community, which employs nearly half of all US private sector workers. The Federal Reserve Bank of Boston estimates that businesses with fewer than 100 employees will absorb approximately $28.4 billion in additional costs this year due to the expanded tariffs.
Unlike major corporations with diverse supply chains, small businesses rarely have the resources to quickly shift suppliers or pass costs to customers. According to data from the US Chamber of Commerce, 72% of small businesses affected by tariffs report they can only pass along about one-third of the increased costs.
“The math becomes impossible,” explains Marcus Reynolds, senior economist at Brookings Institution. “When your margins were already thin before a 25% cost increase, there’s often nowhere to hide.”
The current situation represents the third major escalation in US-China trade tensions since 2018. Treasury Department figures show bilateral trade declining 17% over the past five years, but interdependence remains high in key sectors like electronics, textiles, and industrial components.
For James Wilson, who runs a custom furniture manufacturing business in North Carolina, the tariffs on specialized hardware from China created an immediate crisis. “These specific hinges and mechanisms aren’t made domestically,” Wilson explained during my visit to his workshop. “I’ve looked everywhere. It’s not about being unwilling to buy American – these specific components simply aren’t produced here.”
The US Trade Representative’s office maintains that tariffs create leverage for addressing China’s trade practices while protecting American industries. However, a recent MIT study concluded that manufacturing employment in tariff-protected sectors increased by only 1.2% while consumer costs rose by 4.5% across affected product categories.
“We’re seeing a significant disconnect between policy intentions and small business realities,” notes Dr. Elena Kwan, director of international trade studies at Georgetown University. “The burden falls disproportionately on the smallest enterprises with the least flexibility.”
Some businesses have found creative adaptations. Tom Richards pivoted his Denver-based electronics distribution company to focus more on domestic products after previous tariff rounds. “It was either adapt or close,” Richards told me. “We lost about 30% of our product line but survived by specializing in US-made components where we could actually maintain margins.”
Not everyone has that option. The National Federation of Independent Business reports that 41% of small importers affected by tariffs lack viable alternative suppliers. For specialized components, that number rises to 68%.
Treasury Secretary Janet Yellen acknowledged these challenges in congressional testimony last week, noting that “targeted relief measures for small businesses caught in trade crossfire” are under consideration. However, no specific programs have been announced.
What’s often missing from policy discussions is the human element. In Milwaukee, Rebecca Alvarez showed me empty shelves in her toy store where Chinese-made educational products once stood. “These items represented about 40% of our revenue,” she said. “Now they’re either unavailable or priced beyond what my customers can pay. I’ve had to let two employees go already.”
The timing couldn’t be worse for many small businesses still recovering from pandemic disruptions. Federal Reserve data indicates that small business cash reserves are 23% below pre-pandemic levels while debt obligations have increased 17%.
“It’s death by a thousand cuts,” says Michael Peterson, who runs a small electrical components distribution business in Phoenix. “COVID supply chain problems, inflation, labor shortages, and now tariffs. Each one might be survivable alone, but together they’re crushing.”
Some economic analysts point to potential long-term benefits. “Reduced dependence on China and supply chain diversification will eventually create more resilience,” argues Robert Chang, chief economist at Capital Market Partners. “But we can’t ignore the transition costs, which fall heavily on small businesses.”
What’s clear from my conversations with dozens of small business owners is that policy decisions made in Washington and Beijing translate into immediate kitchen-table issues for millions of Americans. As the trade situation evolves, their stories deserve more than footnote status in the broader economic narrative.
The question many small business owners are asking isn’t about geopolitical strategy or trade balances – it’s much simpler: “How do I keep my doors open through next month?”
For many, the answer remains troublingly unclear.
