Are New Tariffs Helping or Hurting American Businesses?

Set all aspects of politics aside for a moment. Consider the new tariffs being proposed and put in place globally. Whether in North America, China, or otherwise, tariffs change the way people invest and spend.

The Trump Administration is putting in place numerous tariffs. They claim this should support businesses and drive manufacturers to produce products in the U.S. rather than keeping good factory jobs overseas. Yet, there’s quite a debate about whether this is good or bad for the country.  Small business owners, who have the least amount of liquidity in their capital, are often the first to feel the impact of international policy like this. What can you expect, and what should you do to plan for them?

Let’s take a look at both sides.

How Tariffs May Help Small Businesses

Big companies who are struggling under the weight of tariffs may need to spend some time moving operations to other locations. In doing so, that may create an opportunity for small business owners to provide goods that may be out of reach from big companies right now, especially if they are already producing in the U.S.

Smaller businesses already operating fully in the U.S. are also likely to see more demand for their products because they may cost less than products coming from companies forced to raise prices due to tariffs. American producers will also see more demand from companies who need new suppliers. Instead of importing low-cost goods from Asia, many companies will turn to domestic producers for more affordable products, increasing their demand.

For some companies, such as steel, aluminum, and other material industry businesses, the tariffs mean big companies, like Apple, Target, and Ford are turning to domestic companies for business, as noted by U.S. News and World Report. This may create a jolt of domestic productivity.

How Tariffs May Hurt Small Businesses

Small businesses using international manufacturers or suppliers may feel a significant pinch due to the tariffs as a direct effect. A survey from BizBuySell found 43 percent of small business owners are likely see costs increase as a result of tariffs with China. Suddenly, it costs more to buy the same products they need. This may mean they need to move production to a country that isn’t impacted or bring production closer to home. This can be expensive.

The best way to avoid doom would be to shift suppliers away from China or other countries where tariffs will impact sales. Luckily, there are an influx of new suppliers available to help in this way. Companies may, alternatively, need to look for new products or increase prices to consumers to match their new costs. The same survey found 64 percent of companies will raise prices to combat growing costs.

The implications of tariffs on small businesses will range widely. Companies with significant operations or suppliers overseas will take much of the heat, requiring significant supply chain changes. Domestic companies fully operating with U.S. goods will fair the best, as long as the economy remains stable.