Economists generally dislike tariffs, saying they tend to raise prices for consumers — a prospect many company executives are already warning about. Small business owners who shouldered Trump’s first round of taxes told NBC News last month that they have struggled to adjust, with many describing limited options for absorbing the increased costs compared to biggest rivals. The new tariff schedule Trump is seeking would be much steeper and more extensive if fully implemented.
“In his first term, President Trump imposed tariffs against China that created jobs, spurred investment and did not result in inflation,” Trump transition spokeswoman Karoline Leavitt said in a statement. “President Trump will work quickly to fix and restore an economy that places American workers [first] restoring American jobs, lowering inflation, raising real wages, lowering taxes, reducing regulations, and divesting American energy.”
Analysts generally disagree, though Wall Street seems skeptical that the incoming administration will follow through on all of its trade promises.
“Trump’s policy proposals from his campaign, at face value, could result in higher inflation in the near term and lower growth in the medium to long term,” researchers at S&P Global Ratings said in a note on Tuesday. . But only the effects of the tariffs on energy markets could convince the incoming president to back down, S&P analysts said, adding that some experts see his latest proposal as “classic Trump” — a negotiating tactic that doesn’t need to be mined. words.
But many small business owners aren’t taking their chances.
“I’m a lot more concerned now, unfortunately,” brewer Chris Smith wrote in an email after the election. Smith, the owner of Virginia Brewing Company, in Williamsburg, Virginia, said last month that he has paid an extra $1,000 for tap handles every year since Trump imposed 25% tariffs on steel in 2018. Now he is accelerating the purchase of a stainless steel fermentation vessel from China and potentially a grain silo.
Smith said he typically adds a tank each year to his brewery, costing up to $30,000. He is also looking at the price of aluminum cans, hoping to negotiate prices with middlemen.
Angie Chua, founder of Bobo Design Studio, a small stationery company in Palm Springs, California, is already looking for ways to save in case her costs rise.
Chua makes its signature product, a travel magazine, in China — whose exports Trump has threatened to hit with 60% tariffs. Chua said that until she spoke with NBC News last week, before Trump’s latest announcement, she didn’t realize he wanted such high tariffs on Chinese goods. “It would be the nail in the coffin for us,” she said. “Sixty percent is terrible.”
Chua said that after a difficult year for Bobo’s e-commerce sales, she does not have the funds to place a large order up front and that switching to local suppliers would be too costly. So for now, she’s considering adding a surcharge as an item to her products so consumers can see what the price used to be.
“We will cross the bridge when we get there,” Chua added, echoing some of the uncertainty among market analysts. “How do you predict someone who is known to be very unpredictable? How do you predict this?”
Consumers may focus on imported goods when evaluating how the tariffs affect the prices they pay, and domestic industries will also be affected, said Hadley Douglas, who co-owns Boston wine shop Urban Grape with her husband, TJ Douglas.
It works with distributors to offer wine in its stores, as required by law. If European or South American wines become more expensive, smaller distributors’ profits will shrink, Douglas said, which could put them out of business. But those same distributors also deliver domestic wines across state lines, meaning US wineries can have trouble getting their bottles on the shelves.
It will start at the smallest level of family-owned distribution, and that is the first domino to go.
Hadley Douglas, co-owner of Urban Grape, Boston
“It’s going to be a slow burn,” Douglas predicted. “It’s going to start at the smallest level of family-owned distribution, and that’s the first domino to go. They operate on very small margins.”
Douglas anticipates raising prices to cover the cost of potential tariffs, but worries about losing customers as a result. She and her husband are part of the US Chamber of Commerce’s Small Business Council, a group of about 100 entrepreneurs in various fields who agree on nothing. Tariffs are the exception, she said: Everyone is against them.
Not all businesses have the cash on hand to stockpile inventory or expedite purchases, as some big brands already plan to do. Joe Hakim, general manager of Akroyd’s Scottish Bakery in Redford, Michigan, is delaying his Easter chocolate order, which he usually places in October, to ensure it arrives on time. But with potential tariffs on the horizon, he’s worried the price will rise and he decided not to take the risk.