Small Businesses in Limbo Amid Trump’s Tumultuous Trade War

Many small-business owners may be feeling whiplash after the Trump Administration has spent the past several weeks announcing, pausing and adjusting hefty tariffs on imported goods and parts that business owners rely on.

Ninety percent of U.S. firms that import from China are small businesses with fewer than 100 employees, according to U.S. Census Bureau data. And businesses of this size are typically not well-positioned to withstand supply chain disruptions or price increases.

“The unpredictability makes long-term financial planning nearly impossible,” Hugo Ramirez, owner of Frio Mexican Treats, an ice cream shop in Appleton, Wisconsin, told NerdWallet via email. “Instead of investing in growth opportunities, we’re focused on building cash reserves and extremely cautious with spending. When you don’t know what policy changes might come tomorrow, you’re forced to operate in survival mode rather than growth mode.”

Several of the small-business owners we spoke with echoed this sentiment, and shared how they’re navigating shifting tariff policies and planning for uncertain futures.

Pursuing new revenue streams

As a result of tariffs and higher prices, business owners are thinking outside the box — testing out new revenue streams and pivoting their existing business models where possible.

Denise A. Grant runs Hactac Events, a wedding and event design company based in Paramus, New Jersey. To create her custom floral arrangements, Grant usually uses a combination of fresh and artificial flowers.

Lately, that balance has become harder to maintain. Artificial flowers, especially those imported from China, have become significantly more expensive due to tariffs. What was once a cost-saving option, is now often more expensive than fresh flowers, she told NerdWallet.

To offset rising costs, Grant got creative — she opened a “new arm of revenue” by renting out her artificial flower inventory to other local event professionals.

In a different industry, but facing similar challenges, Connor Alexander is also readjusting his current business model. Alexander owns Coyote and Crow Games, a specialized board and card game publishing company based in Seattle that uses Chinese manufacturing.

As tariffs have increased costs and made his pricing strategy difficult, Alexander is exploring ways to incorporate more digital elements into his business — like releasing a PDF version of his games before a physical one is available.

Searching for new suppliers

To avoid the rising costs of overseas imports, some business owners are turning to local or alternative suppliers.

Grant, for example, has shifted to sourcing her fresh flowers locally, rather than importing them from South America, which she says has worked well for her. But not all business owners have found the same success.

Rob Kurnik, owner of Superior Coffee Roasting in Sault Sainte Marie, Michigan, uses coffee beans from multiple countries to create some of his best-selling blends. He has had difficulty identifying coffee-producing countries that aren’t subject to tariffs.

“This strategy offers limited security as tariff policies have been changing without warning,” he told NerdWallet via email.

Similarly, Alexander has been looking at pivoting away from Chinese manufacturing for his games. But given the country’s infrastructure, technology and skilled workforce, he says moving production out of China will be a major challenge.

And even with the current 90-day pause on higher Chinese tariffs, Alexander isn’t optimistic. “These pauses are meaningless unless someone already has inventory on the water and is arriving in port.” Otherwise, he said, he has to have his product produced and ready to ship within the 90 days.

“The pause announcement doesn’t change anything. It reinforces the core problem,” he said. “I think it underlines the fact that as soon as I can, I have to pivot away from working with China, or likely any manufacturing partners in other countries.”

Downsizing staff

For three consecutive months this spring, small-business owners reported finding qualified workers as their top challenge, according to the NFIB Small Business Optimism Index^[0]

Tariffs forced Rob Kurnik to lay off one employee and cancel a planned new hire. The rising costs and tariff impacts on imported coffee beans put Kurnik in a tough position, as his sales revenues have declined. The company was left with few alternatives other than those staffing changes, Kurnik told NerdWallet.

Other business owners, such as Hugo Ramirez, are taking on additional shifts themselves, rather than scheduling staff to work. He says making these adjustments, among others, can help minimize the impact on customers. Consumers are already stressed by rising prices, he told NerdWallet, so small businesses are trying to absorb as much of the tariff impact as they can.

Pausing expansion plans

Tariff uncertainty has also forced small-business owners to delay expansion, scale back growth and pause new ideas.

Ramirez had plans to open a food truck this year, but economic unpredictability has led him to postpone that investment in order to conserve money.

Similarly, the cost of equipment and reduced manpower has forced Kurnik to hold off on his plan to produce K-cups in-house. “We’re in a holding pattern when we should be expanding,” he told NerdWallet.

Alexander of Coyote and Crow Games currently has five active projects in development, but says he can’t move forward with anything new due to rising costs and uncertainty. One of the projects he’s shelved is a game featuring traditional beading crafts — which Alexander says can only be sourced in China.

“At this point, it’s not even a question of growth but of survival,” he told NerdWallet. “Development costs money, he said, “so nothing new is happening right now.”