Small Businesses Find It ‘Hard to Breathe’ as Tariffs Persist

Tariffs are placing an increasing strain on small businesses in the United States.

Many of these companies did not have the money or storage space to stockpile merchandise before new levies were put into place, The New York Times reported Monday (Sept. 29). These merchants have also hesitated to raise prices for fear of repelling customers, leaving them vulnerable to price increases and putting profit margins at risk.

“It’s hard to breathe,” said Brandon Mills , CEO of Total Promotion Company , a Las Vegas maker of promotional products, custom apparel and merchandise that sources most of its apparel and printing materials from China, per the report.

Mills said the increasing cost of tariffs has eaten into the margins of some orders, and he now wonders if he would have been better off not filling them, according to the report. To compensate, he has laid off one of his seven workers and asked his bank to extend a line of credit to cover his bills.

After the Federal Reserve reduced interest rates, Chair Jerome Powell said that “companies that sit between the exporter and the consumer” are absorbing the brunt of the tariffs, per the report.

Data from the Federal Reserve Bank of Atlanta showed that 86% of companies that import products by sea, the most common means of international trade, have less than 50 employees, the report said. These small businesses tend to import goods from one supplier and one country, making them susceptible to steep increases in tariffs .

New tariffs have helped kick off a revolution in digital procurement among small- to medium-sized businesses (SMBs), accelerating the adoption of automation, data analytics and embedded finance.

“Innovative, next-generation supply chain management platforms, once out of reach for SMBs, are now increasingly affordable and scalable,” PYMNTS reported April 28. “These systems can help them map their supplier networks, forecast tariff impacts and quickly model what-if scenarios.”

Priority CEO Tom Priore told PYMNTS in April that, regardless of the economic environment, SMBs are constantly forced to make their way through an ocean of complexity. Bundled financial services can help them speed cash flow and optimize working capital.

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