Economists widely dislike tariffs, saying they tend to raise prices for consumers — a prospect that many business executives are already warning about. Small business owners who survived Trump's first round of tariffs told NBC News last month that they were struggling to adapt, with many describing limited options to absorb higher costs compared to larger competitors. The new list of tariffs that Trump is calling for will be more severe and far-reaching if implemented in full.
“In his first term, President Trump imposed tariffs on China, which created jobs, stimulated investment, and resulted in no inflation,” Carolyn Leavitt, Trump’s spokeswoman during his first term, said in a statement. “President Trump will act quickly to repair and restore an economy that puts American workers (first) by re-supporting American jobs, lowering inflation, raising real wages, cutting taxes, cutting regulations, and deregulating American energy.”
Analysts generally disagree, although Wall Street appears skeptical of the incoming administration's ability to deliver on all its trade promises.
“Trump’s policy proposals from his campaign, on the face of it, could lead to higher inflation in the near term and lower growth in the medium to long term,” researchers at S&P Global Ratings said in a statement on Tuesday. But the effects of tariffs on energy markets alone could convince the next president to back down, Standard & Poor's analysts said, adding that some experts see his latest offer as “classic Trump” — a negotiating tactic that should not be taken literally.
But many small business owners don't take advantage of their opportunities.
“I'm much more concerned now, unfortunately,” brewer Chris Smith wrote in an email after the election. Smith, owner of Virginia Beer Co., in Williamsburg, Virginia, said last month that he has been paying an extra $1,000 for tap handles every year since Trump imposed a 25% tariff on steel in 2018. Now he is working to speed up purchases of stainless steel. A steel brewing vessel from China and possibly a grain silo.
Smith said he typically adds one tank each year to his brewery, at a cost of $30,000. He also monitors the prices of aluminum cans, hoping to negotiate prices with brokers.
Angie Chua, founder of Bobo Design Studio, a small stationery company in Palm Springs, California, is already looking for ways to save when her costs rise.
Chua manufactures her signature product, a travel magazine, in China — whose exports Trump has threatened to impose 60% tariffs on. Chua said that until she spoke with NBC News last week, before Trump's latest announcement, she did not realize he wanted such high tariffs on Chinese goods. “That would be the nail in our coffin,” she added. “Sixty percent is terrifying.”
Chua said that after a difficult year for Bobo's e-commerce sales, she did not have the funds to place a large order in advance and that switching to local suppliers would be too expensive. So, it is currently considering adding an additional tariff as a line item on its products so that consumers can see what the price used to be.
“We will cross the bridge when we get there,” Chua added, echoing some of the skepticism among market analysts. “How can you predict someone who is known to be completely unpredictable? How can you even predict that?”
Consumers may focus on imported goods when they evaluate how tariffs will impact the prices they pay, and domestic industries will also be affected, said Hadley Douglas, who owns the Urban Grape wine shop in Boston with her husband, TJ Douglas.
It works with distributors to deliver wine to its stores, by law. If European or South American wines become more expensive, small distributors' profits will diminish, potentially putting them out of business, Douglas said. But the same distributors also deliver domestic wine across state lines, which means U.S. wineries may have trouble getting their bottles on shelves.
It will start at the smaller, family-owned distribution level, and that's the first domino that will come to an end.
Hadley Douglas, co-owner of Urban Grape, Boston
“It's going to be slow,” Douglas predicted. “It's going to start at the smaller, family-owned distribution level, and that's the first domino that's going to go away. They're operating on very small margins.”
Douglas expects to raise prices to cover the cost of potential tariffs but is concerned about losing customers as a result. She and her husband are members of the U.S. Chamber of Commerce's Small Business Council, a group of about 100 entrepreneurs in various fields who agree on almost nothing. Tariffs are the exception: everyone is against them, she said.
Not all companies have the funds to stock inventory or expedite purchases, as some major brands are already planning to do. Joe Hakim, general manager of Ackroyd's Scottish Bakery in Redford, Michigan, is postponing his Easter chocolate order, which he usually does in October, to ensure it arrives on time. But with potential tariffs looming, he worried the price would jump, and decided not to risk it.
