Tariffs And What They Mean For Your Business

Trump’s Latest Tariff Proposals: What They Mean for Small Businesses

President Trump has recently unveiled sweeping new tariff proposals—announcing a 30% tariff on imports from the EU and Mexico and threatening 20–50% tariffs on 23 additional countries, including Canada, Japan, and Brazil, effective August 1, 2025. Simultaneously, a 50% tariff on copper and 35% on 'fentanyl-linked' goods are in the pipeline. Earlier in 2025, 50% steel/aluminum tariffs and 25% auto tariffs were also enacted. These measures introduce significant uncertainty and cost pressures, particularly for America’s small businesses.

What Small Businesses Can Expect in the Coming Year

Rising Costs and Margin Compression
Small businesses are especially vulnerable to tariff hikes, lacking the economies of scale to absorb or offset rising input costs. Industries such as craft brewing, textiles, and specialty manufacturing have already seen higher costs for imported aluminum, hardware, and fabrics. In many cases, business owners must either raise prices—risking customer loss—or accept tighter margins.

Supply Chain Disruption and Inflationary Pressure
Tariffs disrupt sourcing and inventory planning, creating challenges in maintaining cost-efficient supply chains. Retailers and manufacturers are reporting front-loaded orders and scrambling to secure domestic alternatives—often at higher prices. The cost of core materials like steel, aluminum, and plastic has surged nearly 30% from January to May 2025, with many businesses passing these costs to consumers.

Export Retaliation Risks
Many small businesses that import also export and may face retaliatory tariffs abroad. Countries like Canada and the EU are already discussing targeted countermeasures against American goods, potentially harming agricultural producers, rural manufacturers, and artisans competing in foreign markets.

Financial Strains and Strategic Vulnerability
A Senate report warns that sectors operating on tight margins are at risk of layoffs or closures due to the increased costs. One business owner reported a $100,000 increase in container costs post-tariffs. Unlike large corporations, small businesses often lack the capital buffers to survive sustained price shocks.

Forecast Over the Next Year

Short-Term Shock and Adjustment
In the months ahead, small businesses will need to revise budgets, adjust pricing, and find new suppliers. While some may successfully pivot to domestic sourcing, others may face delays or higher costs. A nimble approach to procurement and customer engagement will be essential.

Policy Volatility Adds Risk
Sudden and complex rate changes—from copper to fentanyl-linked items—create an environment where firms hesitate to invest or expand. This uncertainty especially affects small firms with narrow planning cycles.

Potential Opportunities in Domestic Markets
Some firms may benefit from demand for U.S.-produced alternatives, particularly in metals and manufacturing. However, the ability to meet demand quickly is limited, and true reshoring requires time, capital, and infrastructure support.

Key Takeaways for Small Businesses

- Prepare for supply chain shocks: Diversify vendors and consider forward-purchasing key materials.
- Monitor policy shifts: Stay current with trade updates to anticipate future changes.
- Mitigate risk through sourcing strategy: Explore near-shoring or local production where feasible.
- Advocate for relief: Join trade associations pushing for carve-outs or relief programs.

In summary, President Trump’s proposed tariff expansion poses significant risks to small businesses over the next year. Survival will depend on adaptability, smart sourcing, and proactive financial planning amid ongoing trade volatility.