Rising tariffs could squeeze small businesses, driving up costs on everything from packaging to payroll.
For a small business owner, every penny counts. You pinch a nickel here, save a dime there, all to keep your doors open and your customers happy. You might be a baker, a boutique owner, or a tech repair guru, but you’re probably not spending your nights following the finer points of international trade policy. However, here’s the thing: a significant portion of what goes into your business, from the ingredients you use to the software you purchase, originates from all over the globe. That’s where tariffs come in.
Higher tariffs, essentially taxes on imported goods, can feel like a distant storm cloud. You see them on the news, but you don’t feel the rain yet. However, for many small businesses, those clouds can gather quickly and start pouring on their bottom line. The ripple effect can touch everything. What seems like a simple trade decision in Washington or a foreign capital can make your supplies more expensive, your equipment harder to afford, and your customers less willing to spend. Let’s take a look at some of the hidden costs that could hit your wallet if tariffs go up.
Packaging and Shipping Supplies
This is a hidden cost that sneaks up on everyone. The cardboard boxes, bubble wrap, and plastic packing tape you use to ship your products often come from international suppliers. Higher tariffs on these items can make every single outgoing package more expensive. When you’re shipping hundreds of orders a week, that can add up to a significant new expense that you weren’t planning for.
Raw Materials and Components
If you make things, you’re buying materials. A higher tariff on steel, aluminum, or even certain plastics can make your production costs jump overnight. For a small furniture maker who buys imported wood or a craft brewery that gets hops from overseas, a rise in tariffs can seriously cut into their profits. It’s a direct hit that’s hard to avoid. According to a report by the U.S Chamber of Commerce, higher tariffs on steel and aluminum led to an increase in costs for U.S. manufacturers.
Retail Inventory
Most small shops, from clothing boutiques to gift stores, stock their shelves with items made abroad. If tariffs on imported apparel, electronics, or toys increase, the cost of their inventory also goes up. The shop owner then has a tough choice: either absorb the cost and make less money or pass the price increase on to their customers. A report by the National Retail Federation found that small retailers could close due to the impact of tariffs on their profit margins.
Office and Store Equipment
Think about the new computer you bought last year or the cash register you’ve been eyeing. Many of these electronics are manufactured in other countries. If tariffs on things like computers, printers, and scanners increase, the cost of updating your business equipment goes up. This can make it harder for small businesses to invest in the technology they need to stay competitive.
Kitchen and Restaurant Supplies
For a restaurant or cafe, higher tariffs can impact everything from the espresso machine to the pots and pans. Many high-quality kitchen appliances and tools are imported. A tariff increase could make a much-needed equipment upgrade too expensive to even consider. It’s not just the big stuff, either; smaller items like coffee filters or imported spices could also get more expensive.
Construction Materials
If you’re a small business owner planning a renovation or expansion, higher tariffs on things like lumber, drywall, or roofing materials could turn your budget upside down. A report by the Associated General Contractors of America noted that tariffs on construction materials have caused significant delays and cost overruns for small construction firms. It’s a real headache for a project you’ve already been saving for.
Software and Technology Services
This one might be a surprise. Many of the software tools and subscription services we use are developed or hosted using international infrastructure or components. Tariffs on data storage equipment, servers, and other tech hardware could lead to higher prices for the cloud services you depend on every day. Even a slight increase in a monthly subscription fee can hurt.
Food and Beverage Ingredients
For food-related businesses, the list of potential price hikes is long. Think about a pizzeria that uses imported cheese or a cafe that serves coffee beans from South America. Tariffs on agricultural products can make the core ingredients of your business more expensive, forcing you to either raise prices or compromise on quality. A report from the Food and Agriculture Organization of the United Nations estimated a 35% increase in global food prices from 2020 till date; this could lead to an increase in poverty rates in developing countries.
Office Furniture
Do you need a new desk and chair for your employee? They might have a higher price tag if tariffs on furniture imports rise. A tariff hike could make it more expensive to create a comfortable and functional workspace. This makes it harder for small businesses to invest in their physical office space and employees.
Cleaning Supplies
Even the mundane things you use to keep your business clean can be affected. Tariffs on imported chemicals, spray bottles, or even certain types of paper towels could add a bit of extra cost to your weekly supply run. It’s one of those small expenses that add up and can be a hassle to budget for.
Vehicle Parts and Equipment
If your small business relies on a delivery van or a work truck, a tariff on imported vehicle parts could be a big problem. This could make it more expensive to repair or maintain your vehicles, leading to higher operational costs and potential delays if a part isn’t readily available.
Specialized Machinery
Whether you’re a print shop with a commercial printer or a bakery with a specialized dough mixer, there’s a good chance your machinery was imported. Tariffs on these items can make it very difficult to afford new or replacement equipment. A report by the National Association of Manufacturers found that manufacturing activity has declined due to negative effects from tariffs on imported machinery and components.
Employee Costs
This might seem a bit far-fetched, but it’s a real possibility. If higher tariffs lead to inflation and a higher cost of living, employees may demand higher wages to keep up. While it’s a good thing for workers to earn more, for a small business, a significant and sudden rise in payroll expenses can be a major challenge to manage.
Disclaimer – This list is solely the author’s opinion based on research and publicly available information. It is not intended to be professional advice.
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