What American Tariffs Mean for Small Businesses

By Elizabeth Gillen

The past few weeks have been a tumultuous time for global economics. With Donald Trump quickly flipping between tariffs and no tariffs, there is now an uncertain future for small businesses, both in America and further abroad. This is due to the fact that small businesses are often very susceptible to extreme changes in market conditions. What can they do to aptly prepare and ensure that their business sees the other side of Trump’s presidency?

Background of the Tariffs

The fact that Trump has wished to enact tariffs has been no small secret. Since the 1980s, Trump pushed the idea of tariffs, stating that he does not “want to see America being laughed at”. On the 2nd of April, Trump introduced a series of ‘reciprocal tariffs’ that set a baseline tariff of ten percent for all trading partners, but some countries were faced with tariffs as high as 54 percent. The European Union's tariffs were raised to 20 percent. Tariffs are taxes imposed on services and goods imported from other countries. This usually results in an extra cost being added to the price of the service or goods that the consumer must pay for if they wish to import them. As a result, this often raises the demand for domestic products, as imported products are now more expensive. However, it is important to remember that this may be detrimental for companies that rely on global supply chains and may be unable to replace their imported products. As Trump wrote on his Truth Social platform (February 2nd, 2025): ‘THIS WILL BE THE GOLDEN AGE OF AMERICA! WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!)’. While Trump has had previous policies that have supported small business owners in America, these may not be enough to counteract the harmful impacts these tariffs are sure to bring about.

Small Businesses in America are Threatened

In direct response to these tariffs, a group of five small businesses in America has decided to take legal action. They believe that the statute that Trump used to invoke these tariffs - the International Emergency Economic Powers Act - does not authorize Trump to issue worldwide, sweeping tariffs. The plaintiffs claim that the tariffs have been detrimental to their businesses. One Plaintiff, Terry Cycling, a female-empowering athletic wear company, has already faced increased prices of upwards to 25,000 dollars. They predict that this cost may rise to 250,000 by the end of the year and 1.2 million by 2026. They state that for small businesses like theirs, it is a hit they can not absorb. Consequently, they have been forced to raise their prices on key products, in some cases up to 50 dollars. As their products are not necessities, these price increases is likely to result in lessened demand. While they have tried to move as much production to the USA as possible, it is difficult as this results in a much higher price tag. Also, to redevelop products with only American manufacturing, it could take up to 24 months, resulting in a huge sales delay. 

Another small business owner, Beth Pratt, a baker from Colorado, also struggled with the tariffs. After her business went viral on TikTok, she now sells around 3000 cookies a month. Her biggest setback is the raised prices of ingredients such as eggs and chocolate. The eggs that she bought have risen from $100 a case in December to $145 in February. Chocolate prices have also risen about 60%. This has resulted in ingredient costs rising from 18.5 to 23 percent of her total costs - a huge difference for a small business. She also buys her cookie pouches from a company in China, which is set to face the aforementioned tariffs of 54 percent. She has attempted to switch American suppliers, but they are not well-suited for small businesses since they typically require large order quantities. This shows that small businesses in America are taking a large financial burden due to the tariffs, and the problem is bound to continue. However, it is not only small businesses in America that are affected. 

90-day Pause - Hope for Europe?

It is undeniable that the economies around the world rely on American imports and exports, particularly the European Union. In 2023, the EU exported €502 billion worth of goods to America, making up a fifth of all non-European exports. Particularly threatened are German car manufacturers and the European steel industry. Additionally, any small business in Europe that relies heavily on exporting to America is bound to be heavily affected. After being faced with backlash (but not retaliation)  from 75 countries, Trump reversed his decisions and agreed to put a 90-day delay on the tariffs, with an exception to China. As a result, Europe is able to breathe a sigh of relief. Originally, the EU proposed countermeasures against the original tariffs, but has since paused this plan. During the break, Europe and America aim to come to a new trade agreement. While this development may ease the nerves of European small businesses, it still leaves many questions unanswered for others, especially for those small American businesses that rely heavily on Chinese imports.

What now?

It is nearly impossible to predict what will happen next in Trump’s government. While the reciprocal tariffs may be paused for now, it is difficult for American businesses to continue their business as normal - they have now lost confidence in the security of the future. Trump’s decisions are volatile and extremely unpredictable. While one may encourage these businesses to start buying their materials from American retailers, this has proved to be far more expensive and inaccessible, especially for small businesses that can not handle the large minimum order requirements. It's clear that if Trump wishes to support small businesses with these tariffs, his thoughtless actions are leaving little time to prepare.

Sources: PBS, The University of Queensland, CNN, Forbes, CNBC, American Congress, Liberty Justice Centre, Business Insider, EuroNews, The Guardian, RSM.

Written by Elizabeth Gillen

Edited by Roos Hoogesteger & Karla Kohlhaas