The recent and ongoing increase of tariffs on Chinese imported goods has put many small businesses in a position of uncertainty and economic stress. As an example, in early April the Trump administration increased tariffs on imported Chinese goods to an incredible 145%. This unprecedented surge has hit sectors that rely on imported products, especially hard. The gaming and toy industries—which primarily manufacture their products in China—have been particularly hard hit.
Jonathan Silva, the owner of WS Game, has experienced the impact of these tariffs personally. His company rocketed into the national spotlight earlier this fall when one of its games was included in Oprah’s Favorite Things list for 2024. Now, for three weeks, three containers of finished games — $500,000 worth — have been sitting in China. Originally launched as a mobile app, WS Game’s products are now in 14,000 stores throughout North America. The uncertainty from the delay endangers his business and jeopardizes the future for everyone who relies on it.
Small business owners from the hospitality to travel to retail sectors share that they are angling in a state of desperation. Lisa McDonald, owner of TeaHaus, said she was heartbroken by what happened. Her finest teas are further up this ladder — her best teas start at $33 for a 50 gram bag. The tariffs will make these teas impossible to afford.
“I don’t think I can charge $75 for a 50-gram bag of tea, no matter how amazing that tea is,” – Lisa McDonald
McDonald emphasized that the U.S. cannot meet the demand for tea domestically, stating, “We can’t grow tea in the U.S. to the extent that we need. We can’t just flip the industry and ‘make tea great again’ in America. It just can’t happen.” This outlook reflects a deepening anxiety among small businesses that, like so many in the supply chain, depend on imports to deliver what consumers want.
One other small business owner struggling to make rent these days is Jeremy Rice, co-owner of House, a home décor store in Lexington, Kentucky. Rice has made a name for himself creating arrangements with artificial flowers and gets about 90% of his stock from China. In fact, he ordered his holiday décor earlier than usual this year. Unlike in years past, he hopes his regular floral stock won’t last more than two or three months. The continuing trade war, which has become a major threat to the sustainability of his business, has him worried.
“After that, I don’t know what we’re going to do,” – Jeremy Rice
Rice is appropriately freaked out. His concern reflects a growing anxiety shared by small retailers who feel these tariffs may kill their businesses. To keep their inventory diverse, he collaborates with dozens of vendors. He is concerned that small businesses will be the hardest hit by increased tariffs.
For example, Jim Umlauf, the founder of 4Knines, which sells dog products like car seat covers, has taken a different approach by absorbing the additional costs from the tariffs. This decision has severely limited his company’s potential for growth and dramatically compressed profit margins. Umlauf even mentioned that they lost $16 million worth of orders. This loss is the result of three major U.S. retailers lowering their expectations in response to recent tariff increases.
“We only have a limited amount of inventory left, and without some relief, we’ll run out soon,” – Jim Umlauf
Umlauf called on lawmakers to think about the real-world effects trade policies have on their small business constituents. He cautioned against judging them solely on stock price performance or measures of global competitiveness.
“It’s time for policymakers to consider the full impact of trade policies not just on stock prices or global competitiveness, but on the real people running small businesses,” – Jim Umlauf
The impact of these tariff increases have been catastrophic. For decades, it was smooth sailing and steady growth for most of these small businesses. This sudden change has slammed their efforts to a halt. The trade environment has created an atmosphere of uncertainty where owners feel trapped between rising costs and consumer expectations.
Our nation’s independent businesses are resuming operations even as they bravely face treacherous waters. They’re still hoping for more relief that will allow business to go on without compromising their integrity and quality. Many are left wondering how long they can withstand the pressures brought about by escalating tariffs and what the future holds for their enterprises.
