Tariffs on Imports Rocking Small Businesses as They Scramble to Adapt

Looming tariffs on imported goods, parts, and raw materials have small businesses worried and planning for the worst. With uncertainty about when tariffs will be enacted, which countries will be affected, and how long these measures will last, small business owners are scrambling to strategize and prepare for price increases that will diminish profits and impact everything from expansion plans to hiring.

“As we speak, we are printing out new price tags,” said Franco Salerno, co-owner of Darianna Bridal & Tuxedo, in Warrington, Pa. Salerno’s business, which he started with his wife, Wendy, 12 years ago, is already feeling the impacts of the tariffs.

“Dress designers are already notifying us that they are raising prices to cover any tariffs,” Salerno said.

For many small businesses across a variety of industries, raising prices now does not help with orders placed months ago. Darianna, for example, takes deposits on dresses six months or more in advance.

“All of the dresses that were sold in the past several months had a retail price that was based on our costs from the designer at the time,” Salerno said. “As the dresses ship to us in the next three to five months, the gowns will most likely have a tariff added to them. We cannot go back and have the bride pay the tariff because we already agreed on a price.  These tariffs will have to be absorbed by us and reduce our margins.”

[Read the U.S. Chamber of Commerce's statement on tariffs]

Price increases impacting competitiveness

Even businesses that can pass the cost of tariffs on to customers immediately say they are worried these added costs will impact their ability to remain competitive and profitable.

“We are already starting to see price increases because this is an uncertain time, so people start to speculate about what’s going on,” said Traci Tapani, owner and co-president of Wyoming Machine, a 50-year-old company in Stacy, Minn., that buys sheets of steel, aluminum, and other metals and transforms them into the parts its customers purchase.

“The customer will push back on us passing the price increases to them,” Tapani said. “In our industry, we are already seeing higher costs due to inflation and wage increases. Adding this additional cost pressure and chaos in the market hurts. It’s a real thing. It’s harmful to our company and the industry.”

Waning competitiveness is a key concern for small businesses from a wide range of industries, and it’s not just rising prices due to tariffs that have businesses worried — supply chain delays are also expected because of these disruptive measures.

“As a small business, we are always challenged to exceed our competitors’ performance while meeting (or exceeding) customer expectations,” said Mary Gordon, President of Central Safety Equipment, based in Burlington, N.J., which makes protective guards and covers for equipment and machinery. “We have to have exceptional quality, on-time delivery, and competitive pricing.  This is often difficult to do simply because of our limited buying power and influence.  Coupled with rising import costs, we could face losing key business opportunities.”

The company, which has been in business for 79 years and employees 32 workers, also expects it may lose global business with its overseas customers because reciprocal tariffs will make it more cost-effective for these companies to buy locally.

“If these proposed tariffs are reciprocated, we will undoubtedly lose business to competitors more local – and less costly – to them,” Gordon said.

Hiring and growth will stall

Small businesses are also worried about the impact tariffs will have on their ability to grow their businesses. That’s because many say they will not be able to pass the entirety of tariffs on to customers. Instead, several small businesses told CO— that their current plan is to spread the costs out across all partners in the supply chain.

“Our plan is to ask for every person in our supply chain to absorb some of the cost,” said Stephanie Boms, co-founder of Nessel, a Connecticut-based company that provides comprehensive lactation space solutions for organizations and businesses. “Some will be absorbed by our manufacturing partners, some by ourselves, and some by our customers. We won’t be price-competitive if we pass all onto our customers.”

Boms, who founded the company with her business partner Della Leapman in 2019, says the uncertainty around tariffs is contributing to the difficulty of making a good plan for dealing with them.

“There is a complete lack of clarity on what’s happening,” Boms said. “It's hard to know how to plan successfully.”

Other companies agree that one thing that is clear is that tariffs will impact their ability to grow and hire new employees.

“Either we’re going to take the brunt of impact and not be able to grow and reinvest in our business, or we’re going to pass it along to customers and potentially lose business,” said Marie Olberding, CFO of Select Arc. Inc., a Fort Loramie, Ohio-based manufacturer that imports steel to build welding electrodes. Olberding said hiring is one of the areas where the company may have to cut back.

Other companies agree that they will likely have to curb growth plans and cut spending across the board.

“We have to revisit our budget for this year and allocate a high portion for tariffs and cut our marketing spend,” said Brittany Hizer, co-founder and COO of Pluie, Inc., a Texas-based company that makes diaper-changing tables found in businesses including CVS, Starbucks, IKEA, Costco, Legoland, and MLB stadiums. Her company has been impacted by tariffs on steel and aluminum and is also anticipating being hit by tariffs on the products it is manufacturing in China.

“We are very concerned and already seeing small businesses fold in advance of the tariff increases taking place,” Hizer said.

Bracing for the worst

Even the smallest companies worry that tariffs will impact their businesses. James Martin, Owner of Dancing Muse Costume Shop in Keizer, Ore., isn’t importing steel or raw materials. His one-person company, which has been in business since 2005, imports apparel that is sold at his retail store and at local festivals. Martin says that he is already seeing price increases on the products he imports. He’s also worried that overall rising costs will impact his customers’ ability to buy non-essential goods and products, like the ones he sells.

“My customers will be affected in their pocketbooks…by making other items expensive even before shopping my wares, reducing their buying power at my shop,” Martin said. “I will lose out on sales and wind up with a lower profit margin and with less revenue to pay taxes on.”

For now, many businesses are resolved to endure the challenges tariffs pose, though they know it won’t be easy.

“Tariffs will very much impact our business. All our customers will be impacted including distributors, dealers, and customers,” said Frank Saito, owner of San Diego-based K & S Technologies, which has been manufacturing motorcycle parts since 1976.

“We don’t want to increase our prices, but we will because we have to survive. The chain reaction will be that everyone will have to pay more. Parts are always needed. Our customers cannot ride without them. Whatever the government does, I have to follow the law, but I'm not happy about it,” Saito said.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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