- Trump has said he’ll institute tariffs on imports from China, Canada, and Mexico by February 1.
- Small businesses are bracing for potential price hikes and supply chain disruptions.
- Some stocked up ahead of time in hopes of keeping prices steady, others are in wait-and-see mode.
Customers at Mellow Monkey, a home decor and gift store in Connecticut, sometimes ask owner Howard Aspinwall why so many of his products are made in China. In response, he shows them the products he sources from the US — and their higher price points. He said they usually balk.
“Their wallet can only support buying from China,” he said, adding, “The problem I see at the retail level is customers don’t want to pay higher prices for the products that they’re buying now.”
But it looks like buying some imported goods is about to get more expensive. Trump has said he would enact a 25% tariff on goods from Canada and Mexico by February 1 with a potential 10% tariff on Chinese goods also on the table.
More than half a dozen small business owners BI spoke to are waiting to see how their goods might be impacted. Some placed advanced orders; others are negotiating new deals and finding new suppliers. One, who specializes in holiday goods, is sitting back, waiting, and hoping they don’t have to go out of business.
The uncertain impact of tariffs
Angie Chua is the owner of the stationery line Bobo Design Studio, which has a retail location in Palm Springs, California, and imports goods from China. She started worrying about tariffs around the time of the election but wasn’t sure if Trump’s plans would ever come to fruition. As his self-imposed February 1 deadline nears, she’s getting more concerned.
Unlike some artist friends she spoke to who put in orders early in case of price increases, Chua didn’t want to expend too much upfront cash. For now, her orders from China are set to come in before February 1. If prices do rise, Chua said the business will remain transparent about growing costs.
“We might add an extra service fee,” she said, adding that she may message to her customers that “this is a Trump tariff fee. This is not anything that we can control.”
Upon taking office, Trump laid out his plans to use tariffs to enrich the US economy. So far, he’s used them as a bargaining chip with Colombia. He told reporters in the Oval Office on Thursday that he would enact tariffs on goods from Canada and Mexico to incentivize the two countries to help mitigate America’s fentanyl crisis. He also previously said he would consider a 10% tariff on China for the same purpose.
“In his first administration, President Trump instituted tariffs that resulted in historic job, wage, and investment growth with no inflation,” White House Spokesman Kush Desai said in a statement to BI. “In his second administration, President Trump will again use tariffs to level the playing field and usher in a new era of growth and prosperity for American industry and workers.”
Economists have warned that sweeping tariffs could lead to price hikes for consumers, and analysis has found that tariffs could reduce GDP and cost the equivalent of hundreds of thousands of jobs. However, tariff advocates have said that the levies can be an important negotiation tool — and potentially incentivize domestic production. President Joe Biden imposed tariffs on Chinese EVs in an effort to bolster US automakers.
“Tariffs play an important role in our trade policy when used in a strategic manner to really go after certain specific trade issues,” Jonathan Gold, the vice president of supply chain and customs policy at the National Retail Federation, said. “I think the concern is going broad-based and hitting everyday consumer essentials.”
Richard Kligman, the co-owner of two Trump Superstores in South Carolina, said that tariffs are not currently an issue for the store. He hasn’t heard from any suppliers saying that prices are going up to reflect a tariff. He’s already well-positioned because the store increased its domestic suppliers during the pandemic, and he said he doesn’t have a problem finding new merchandise — every day, he has someone calling to offer a new Trump product for them to sell.
Kligman said though he’s heard tariffs could lead business owners like him to raise prices for customers — which he would have to do if their raw materials prices were going up — that’s currently not the case.
“I can only look at it from the perspective of my business and in my business it hasn’t become an issue,” he said.
Some businesses are stocking up, others worry about price hikes
Paulina Hoong recently ordered 5,000 tote bags from China. That’s at least 10 times the usual order for her small business. She’s stocking up in case President Donald Trump levies his promised tariffs on China on February 1.
“I am really anxious, actually, because I am uncertain if the whole stock will sell out,” the owner of Menmin Made said.
Rebecca Haacke has also been stocking up on custom dog gear for her Utah-based business River Dog Gear. Haacke imports about 90% of her supplies, the majority from China; she’s been stocking up as much as she can afford to fend off raising prices as long as possible.
“I haven’t changed my shop prices and I’m trying hard not to as long as possible because my customer base are mostly disabled service dog handlers and they will be hugely impacted by any price increase,” Haacke said.
And prices might be top of mind for consumers.
“Just the mere mention of these tariffs have a lot of us in a tailspin,” Joe Hakim, the general manager of Ackroyd’s Bakery in Michigan, told BI. The bakery imports items through distributors; most goods come from the United Kingdom, and some packaging is from China. Any tariff would stretch the bakery’s already thin margins, he said. “All of these costs are being hoisted upon the shoulders of small business, which then have to be placed into our pricing structure.”
Elizabeth Hudy, the owner and creator of The Peach Fuzz — which Hudy described as making “agitational propaganda” encouraging people to “give a damn about their neighbors and their community and to resist fascism” — put in an order for around $15,000 worth of supplies in the last two months of the year. Hudy said that they usually order 90 day supplies, but were doubling up this time around.
Gold at the NRF noted that some of their smaller retailers have shared concerns about their ability to operate should tariffs go into effect, a sentiment Hudy and other business owners echoed.
Hudy said she wished more people understood how tariffs work and that businesses like hers — and their customers — tend to pay them. “It isn’t paid by the country that you’re waging these tariffs against. It’s paid by the importer — it’s paid by me.”
Are you a business or consumer who might be impacted by tariffs? Contact this reporter at jkaplan@businessinsider.com.
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