Tariffs and the Tightrope: How Small Businesses Are Struggling to Stay Afloat

I had lunch this week with a friend who’s been running a retail store for over two decades.

Two decades. That’s a big deal in any industry, but especially in retail, where the landscape changes as often as the seasons and where every new economic policy can feel like a fresh storm rolling in.

Like so many conversations these days, ours drifted to the subject of tariffs. Not surprising. He’s weathered countless storms – economic downturns, shifting consumer trends and the rise of online shopping, but now he’s facing a new threat: tariffs. When a 145% tariff on goods from China is looming overhead, small business owners don’t have the luxury of ignoring it. They’re not running billion-dollar enterprises with layers of legal protection and resource rich logistics departments. They’re placing their own bets, with their own money, on what’s going to be in demand, what’s going to ship on time and what people can actually afford to buy.

“It’s like a slow-motion death by a thousand cuts,” he lamented. “Many of the products I carry are made in China and these 145% tariffs? That’s not just a price hike, it’s a price explosion.”

He explained that if an item previously cost $10 to import, the tariff now adds $14.50 to the cost. This isn’t just a number on a spreadsheet. It’s real-world impact. “Consumers are already feeling the pinch,” he said, “and discretionary spending is taking a hit. Who’s going to pay three times as much for a t-shirt?”

The problem isn’t just the immediate cost increase. It’s the uncertainty. With tariffs fluctuating like a yo-yo, it’s impossible to plan for the future. “I can’t order inventory with any confidence,” he told me. “Will the tariff be raised again tomorrow? Will it be lifted entirely next week? It’s a gamble and it’s a gamble I can’t afford to lose.”

The Weight of Survival

Statistics paint a grim picture for small business longevity:

• About one-third of all new businesses fail within three years.
• Roughly half don’t make it past five.
• Three out of four are gone by year ten.

So surviving twenty years? That’s not luck. That’s hard-earned, nose-to-the-grindstone endurance. It’s knowing your customer base, adapting to market changes and keeping your costs in check without sacrificing too much margin. But what happens when the rules of the game change so drastically, it’s like starting over?

The Triple Threat: Tariffs, Costs, and Customers

My friend’s store, like many, relies on products that are made in whole or in part in China. That’s not because he’s trying to save a few cents. It’s because, in many industries, China is the only source. It’s where manufacturing has gravitated for decades, offering scale, infrastructure and cost-effectiveness that’s hard to replicate elsewhere.

But with a 145% tariff, an item that used to cost $10 now costs over $24.50, before licensing and shipping and handling, before building in a profit. And by the time it’s on the shelf, it may be retailing at $40 or more, easily quadrupling the original price.

That math doesn’t just hurt the store owner. It hurts the customer. And when customers are already stretched thin, deciding whether to pay rent or to fill their gas tank or buy groceries, the idea of spending extra money on anything that isn’t essential becomes a non-starter.

Tariffs don’t just shift economics, they shift behavior. They make people pause before buying. They make businesses pause before ordering. And they make the future feel uncertain, even for the most seasoned of shopkeepers.

Can’t We Just Manufacture It Here?

It’s a fair question: if tariffs are so bad, why not just manufacture more things in the United States?

“Bringing manufacturing back to the U.S. is a dream, but it’s not a realistic overnight solution,” my friend explained. “Building factories, training workers and establishing reliable supply chains takes time and immense investment. And even then, can we compete with the established manufacturing powerhouses overseas?”

The short answer is that we can’t flip a switch.  There is no switch.

A longer answer is that rebuilding domestic manufacturing for many product categories means years of investment in machinery, in training, in supply chains. Even if a business could afford to pay triple to have something made stateside, the infrastructure does not even exist yet. We gave that up years ago when offshoring was the economic trend.

And let’s not forget that costs in the U.S. are higher. Not just labor, but energy, materials, real estate and regulatory compliance. For industries that run on razor-thin margins, this isn’t just a patriotic challenge. It’s a financial impossibility.

The Squeeze is Real

Tariffs don’t just hit goods. They hit confidence. They shake the sense of control that small business owners work so hard to maintain. And when your business is your livelihood, your identity and your future all rolled into one, those shocks hit deep.

We’re seeing more small retailers quietly shuttering their shops, not because they mismanaged their business, but because they were priced out of the market by policy. Others are hanging on, hoping things will stabilize before they run out of money or steam.

A Final Word

Small businesses are the soul of local economies. They’re the corner shops, the quirky boutiques, the family-owned stores that remember your name and what you bought last Christmas. They adapt. They innovate. But even the most agile among them can only bend so far before they break.

As the tariff war escalates, let’s not forget that it’s not just numbers on a spreadsheet. It’s people. Business owners. Employees. Communities. And unless we create space for them to adapt, we may lose a whole generation of entrepreneurs to something they had no say in, because when the cost of doing business becomes higher than the reward, the only sensible decision may be to close the doors and that’s a loss for all of us.

Small business – the backbone of America