Uncertainty around President Trump’s ever-changing tariff agenda is already hitting small businesses hard, and threatening their very survival, operators say.
With baseline 10% taxes on all imported goods in effect and country-based levies looming, business operations have become significantly more challenging for the U.S.’ nearly 35 million smaller enterprises, owners told CBS MoneyWatch.
One of the most pressing challenges they face? Setting prices high enough to absorb the cost of new duties on imports without driving customers away.
Thirty percent of small business owners surveyed by the National Federation of Independent Business in March said they planned to increase prices — the greatest share reported over the past year, an analysis by the Joint Economic Committee found. Raising prices is one way to offset rising costs, while trimming expenses — including by reducing labor costs — is the other alternative.
Employment at small businesses with fewer than 10 employees declined by 3% — or 366,400 jobs — since President Trump took office, the JEC found. That compares with a 1.2% increase in hiring by small businesses in the first months of President Biden’s term, and a 0.1% decrease in the first months of President Trump’s first term, the JEC found.
“Sharpest price increase” in 16 years
Shayai Lucero, owner of Earth and Sky Floral Designs, a small floral design business in Laguna, New Mexico, said she imports a high volume of flowers from Canada, Columbia Ecuador and Peru. Because she’s located in the desert, local farms and gardens can’t produce flowers year-round.
Lucero recently experienced what she called “the sharpest price increase” she’s seen in her 16 years in the flower business, when the price of a single rose went from between 65 cents to 84 cents per stem to a range of $1.89 to $2.44.
“We received emails from several different farms we work with that said after Mother’s Day the tariff prices are going to go into effect,” Lucero told CBS MoneyWatch. She’s increased her prices as a result, with wrist corsages typically sold for $40, now priced at $50.
“That’s not nearly enough of what I should have charged, but because my clientele is not wealthy, I had to take that into account if would people purchase from me or would they go elsewhere?” said Lucero, adding that as her own costs skyrocket, the future of her business is uncertain.
“I have been transparent with customers to try to get them to understand, but if it gets to be too much, I may have to close,” she said. “This is a whole different atmosphere.”
Chinese goods are “unsaleable”
Few businesses are immune to tariffs, but smaller establishments, which tend to operate on thin margins, are among the most vulnerable. Some bigger businesses imported goods ahead of tariffs going into effect, stockpiling inventory. With less cash on hand, small businesses did not have the same ability.
“Small business owners are innovative, driven and scrappy — they often operate on razor-thin margins and are constantly finding new ways to grow,” Sen. Maggie Hassan, ranking member of the Joint Economic Committee, said in a statement. “But President Trump’s tariffs are needlessly causing immense uncertainty for small business owners, forcing them to make layoffs, increase prices for their customers and even close their doors,” she added.
Mike Roach, who co-owns Paloma Clothing, a 50-year-old womenswear store in Portland, Oregon, sells labels that are primarily manufactured in India and China.
He placed orders for a new season’s worth of merchandise three to five months ago, before tariffs on either country were in effect. Today, tariffs as high as 145% apply to goods from China, while a 10% baseline levy is in place on goods entering the U.S. from India.
“The companies we deal with are going through conniptions trying to figure out what they’re going to do. At that level, Chinese goods, are pretty much unsaleable,” he said. “That’s a huge threat to the future of our business.”
Roach hopes his store’s 50th year in business isn’t its last, but it’s a potential reality he’s facing.
“This is the worst and most uncertain situation we’ve ever been in,” he said. “This is way worse than anything else in terms of not knowing what to do and what the future is going to hold because of the uncertain factor.”