By Rieva Lesonsky
In almost every conversation I’ve had with small business owners, business experts and advocates, and even a few government employees, the topic of tariffs comes up. And nearly everyone is concerned.
Eric Groves, co-founder of Alignable, a business network of 9,000 small business owners, says his members are worried. According to Alignable’s April Tariff Report, 44% of SMBs expect reduced sales due to tariffs, up 14 percentage points from February. Of those, 13% anticipate significant revenue drops. In its January survey, 61% of the SMBs surveyed were “optimistic” about the year ahead; now, 62% are “pessimistic.” Groves says, “We haven’t seen a shift like that since Covid.”
Groves isn’t sure how many small business owners can survive the country’s “on again, off again” tariff strategy because it disrupts their [companies’] plans, supply chains, strategies, and sales. And when sales drop, small businesses, which don’t have large cushions of cash on hand, will go out of business.”
Laurel Delaney, president of Women Entrepreneurs Grow Global and founder of GlobeTrade.com is even more blunt, saying, “It’s a shocking abuse of power that is crippling a lot of small businesses. Even with the 90-day pause on levies, America’s tariffs are still the highest in nearly 90 years.”
The FedEx Small Business Trade Index found that 78% of SMBs surveyed think trade directly benefits their businesses, and 73% say tariffs have been a barrier to their businesses internationally.
The tariff tumult will impact millions of American businesses and even more consumers. It could have even deeper repercussions. In a Goldman Sachs “Top of Mind” research report, Nobel Prize-winning economist Paul Krugman says that while “high tariffs don’t normally cause recessions, unpredictable tariffs…very well might.” And he adds, “A recession seems likely.”
To learn more about how tariffs are impacting small businesses, I went to the source and talked to small business owners, experts, and service providers. In part one of our two-part series, we start with the entrepreneurs.
Here, in their own words, small business owners share the effect of tariffs on SMBs.
Business Owners Share Their Tariff Challenges
What Has Been Your Experience with Tariffs So Far?
Adam Rizza, president, Sunscape Eyewear: We have open orders ready to ship that we’ve advised our factories to hold until this tariff situation gets cleared up. Our factories [in China] are concerned since other merchants are also doing this. Our buyers and the stores that carry our products are advising us to cancel orders until the tariff crisis is resolved. Some buyers are raising their costs on strong-selling items.
We can’t absorb this, and neither can the stores. And once our goods arrive, another big challenge will be paying the tariffs, which must be paid to clear customs. This will be a major cash flow issue. Most small businesses don’t have this much cash on hand.
John Lawson, CEO, Shoe String King: The 147.6% tariff on Chinese imports hit like a sudden storm. While we haven’t seen the full effects yet, suppliers are already warning us about significant price hikes.
The most frustrating part is having to make major business decisions with incomplete information. Instead of focusing on growing our business and serving customers, we’re spending hours recalculating costs and trying to predict what might happen next.
Jesse Frimpong, e-commerce growth coach and CEO, Prestige: Tariffs have added a serious layer of complexity. Since we scale e-commerce brands that often rely on global suppliers, we’ve felt the impact through increased product costs and longer lead times. But it’s also pushed us to adapt—we’ve started shifting more toward U.S.-based suppliers who offer extremely competitive pricing without the burden of tariffs. That move alone has helped stabilize our margins and speed up delivery times.
Jamie Shah, president, Chem-Impex International: We’ve been navigating the ups and downs of the global supply chain since 1981. My father came to this country as an Indian immigrant and chemist with little more than a suitcase and a vision, to make high-purity research chemicals accessible to every lab, not just the largest ones. He built a reputation on quality, speed, and trust.
Today, we supply pharmaceutical, diagnostic, and biotech companies worldwide. But tariffs create new headwinds—especially for small-to-midsize suppliers like us who rely on global sourcing for specialty materials. Many of our core building blocks, including key amino acids and antibiotics, simply aren’t manufactured in the U.S.
How Do You Think Tariffs Will Impact Your Business and Others in Your Industry, in Both the Short and Long Term?
Rizza: Short term, we all feel this is not just or fair. Why does Apple get a pass, and all of us small guys have to pay? It doesn’t make any sense to us. Long term, I don’t think our category [inexpensive fashion eyewear] will ever be made in America.
America should be creating patents—making revolutionary products that change people’s lives. America needs to keep innovating and focusing on developing AI and software that makes this world a better place—not sewing shirts, shoes, and hats. Those are simple, low-cost items that can only be manufactured overseas affordably.
Lawson: In the immediate future, small businesses face a severe profit squeeze. When that 147.6% tariff hits our manufacturing costs, our overall product costs jump by about 30 to 40%. We can’t simply pass all that increase to customers without driving them away, so we’re caught in a painful middle ground.
Looking ahead, this will force three major changes: smaller companies will close or be bought out, businesses will frantically look for suppliers outside China, and consumers will ultimately pay higher prices. Those who survive will be stronger but will operate very differently than before.
Wendy Shen, president/CEO, FLOMO/Nygala Corp.: In the short term, it is a cash flow burden, resulting in a loss of sales and a big hit on our financials’ top and bottom line. We will lose a few million dollars in sales since some of our Christmas merchandise is from China, and our crafting items are 100% from China.
In the long term, it will hurt job opportunities. We will freeze new hires, hire freelancers, and turn over more jobs to virtual workers since it is cheaper. Small businesses will experience a lot of losses.
The business will not be sustainable. We won’t have the cash to invest in new product innovation, development, and licensing. These huge tariffs will impact businesses at the top and bottom. If the company is losing money, how can we pay the tariffs? Even if there is a tax incentive or break, it will not help small businesses.
Frimpong: For small businesses short term, it’s tough. Rising costs and supply chain disruptions hit small businesses the hardest because there’s less buffer. But long term, it could actually lead to a more sustainable ecosystem. More businesses are looking for domestic suppliers, which not only avoids tariffs, but also supports American manufacturers and encourages local job growth. It’s a challenge—but it’s also an opportunity to rebuild smarter and more locally.
For our business, in the short term, we’ve had to be really strategic—switching SKUs, reworking margins, and locking in reliable suppliers. But looking at the long term, it’s actually been a blessing. Moving toward U.S.-based partners has made our logistics faster, cut out import fees, and helped us keep pricing competitive. It’s also aligned with our bigger mission of encouraging domestic manufacturing and reducing dependency on unpredictable international trade policies.
Shah: In the short term, sustained tariffs could trigger drug shortages, particularly for generic and specialty compounds. Switching suppliers isn’t simple in pharma—every material change requires FDA approval and stability studies, which take time. Even as companies look to diversify away from China, alternatives like India are raising prices in response to market shifts, and new capacity will take time to come online.
In the long term, innovation is at risk. Academic labs and early-stage biotech companies—where tomorrow’s breakthroughs are born—depend on flexible, reliable suppliers. When you pair rising material costs with declining research funding, particularly in academia, discovery slows down.
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What Are You Doing to Protect Your Business From Tariffs?
Lawson: We’re taking decisive action on three fronts: First, we’re scrutinizing every expense to cut costs without affecting our products or customer service. Second, we’re having straightforward conversations with both suppliers and customers about necessary price adjustments. Third, we’re speeding up our plans to find manufacturers in countries like Vietnam and Mexico, and exploring American options where possible. We’ve also halted some expansion plans to build up more cash reserves for this challenging transition period.
Shen: We are stopping all production in China and have asked our Chinese factory not to ship goods now. But that’s costing us in lost sales and profit. We’ve already paid some deposits, so eventually we’ll have to take the goods. We are trying to contact international customers to see if they want to buy the merchandise, but most are small and cannot take that much merchandise at once. And it all takes time.
Frimpong: We’re diversifying our supply chain, prioritizing U.S. suppliers who can compete on price and reliability, and investing more in digital products that aren’t tied to global shipping. We’ve also built agile systems that let us pivot fast when policies shift. And we’re actively building relationships with American manufacturers to drive mutual growth—helping them scale while they help us stay tariff-free.
Shah: We’re carrying more inventory to ensure availability, even if it means tying up capital. We’re pausing non-essential investments to stay nimble. And we’re doubling down on what’s always set us apart—responsiveness, reliability, and deep customer relationships.
While family businesses like ours don’t have the luxury of coasting, we will survive by adapting, listening harder, and outworking uncertainty. We’ve seen storms before, and we’ll see them again. In these moments, we draw strength from how we started—with nothing more than bold ideas and the will to make them work.
Any Tips to Share to Survive Turbulent Economic Times?
Rizza: Make sure your plan B is ready. Source products in other countries that can support your needs. After Covid, we found suppliers in Vietnam and Thailand; however, with the current tariff chaos, we may be unable to count on them either. In the worst case, we will have to pass the costs on to the customers—everyone will do that—which will affect sales. Be ready—we feel a slowdown is coming.
Lawson: Monitor your cash flow obsessively. Even profitable businesses fail when they run out of operating money during crises. If possible, build a six-month cash reserve and update your projections weekly.
Diversify your supply chain immediately. Don’t wait for perfect alternatives. Start with small test orders from multiple countries to establish relationships before you need them at scale.
Join forces with other small businesses in your industry. Form buying cooperatives to maintain negotiating power, share warehousing costs or split minimum order quantities. The old model of fierce independence is a luxury many can’t afford during this transition.
Shen:
- Reduce expenses.
- Postpone big projects.
- See if you can postpone any large spending on capital improvements.
- Save more cash.
- Improve employees’ skills so they can take on more responsibilities to avoid having to hire this year.
- Get insights and suggestions from peer groups like WEGG [Women Entrepreneurs Grow Global] and a WEGG cohort group.
- Find out if there’s any small business assistance for trade promotion, loans, or free assistance.
- Diversify the business, both suppliers and customers.
- Have a plan A and plan B.
Frimpong: Don’t wait for policies to hit—anticipate and adapt early. Use U.S.-based suppliers when possible—many are becoming more competitive and easier to work with than most people think. Streamline your offers, focus on cash flow, and lean into automation. Most importantly, build a brand that can ride out change, because tariffs might shift, but trust and loyalty are solid.
Tariffs and Small Businesses—Looking Ahead
Clearly, the current tariff policy has already impacted many small business owners, and there are fears it will only get worse. Sunscape’s Rizza says, “Luckily, we already have most of our summer inventory in stock, though we had to raise prices 30% on certain SKUs.
“But we, and many other small businesses in our industry, are very worried about the fall, winter, and holiday seasons. I mean, would you pay $50 for $20 sunglasses?”
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