Understanding Tariffs: The Economic Tug-of-War and the Small Business Struggle
Wtf Are Tariffs and Why Do They Matter?
Tariffs are taxes imposed by a government on imported goods. On paper, they sound like a strategic move: make foreign products more expensive so domestic products can thrive.
In reality, though, the impact of tariffs—especially in a globalized economy—is more complex and far-reaching than most syndicated headlines let on.
With new tariffs on Chinese imports being introduced and expanded in 2025, the ripple effect is being felt across industries—from large manufacturers to small, independent businesses just trying to stay afloat.
I’ll do my best to unpack the pros and cons of tariffs in today’s economy and how they uniquely impact small business owners who rely on Chinese manufacturers.
Pros of Tariffs
1. Protection for Domestic Industries
Tariffs are designed to level the playing field. By increasing the cost of imported goods, they give domestic producers a competitive edge, encouraging consumers to buy locally made products. Which is a good thing if you’re a local manufacturer being beat out by foreign companies that can manufacture the same product but at a cheaper price.
2. National Security and Supply Chain Control
In critical industries like technology or defense, tariffs can help reduce dependency on foreign nations, protecting national interests and promoting domestic innovation. We have plenty of homegrown geniuses here that would cream their jeans if given the chance to have their latest brain child debut to the world. However, it’ll never happen as long as somebody half-a-planet away somewhere gets to center stage first because their country lacks the ethical boundaries of ours.
3. Revenue Generation
Tariffs can bring in revenue for the government without raising internal taxes. These funds can be redirected toward infrastructure, education, or debt reduction. This one is a no-brainer, but we’ve all seen what our taxes really go towards.
4. Strategic Leverage
Tariffs can be used as a negotiating tool in international trade talks, pressuring countries to comply with fairer trade agreements or intellectual property laws.
Cons of Tariffs
1. Increased Costs for Consumers
When tariffs raise the cost of imported goods, businesses often pass that cost on to consumers. Everything from electronics to clothing to everyday household items becomes more expensive. As if prices aren’t already through the roof.
2. Retaliation from Other Countries
Tariffs can spark trade wars, with other nations imposing their own tariffs in return. This creates a cycle of economic strain and disrupts global trade stability.
3. Disruption of Global Supply Chains
Modern businesses often rely on parts or materials sourced globally. Tariffs on these components can halt production, delay timelines, and raise manufacturing costs.
4. Economic Uncertainty
Frequent policy changes and tariff hikes create instability in the market, making it harder for investors and small business owners to plan long-term.
Impact on Small Business Owners
While large corporations may absorb the cost or shift operations, small business owners like myself, aren’t so lucky. Many U.S.-based entrepreneurs rely on Chinese manufacturers for affordable inventory, parts, or raw materials. Tariffs significantly raise the cost of doing business.
1. Higher Costs = Thinner Margins
For small e-commerce stores, product designers, or private-label brands, a 20-30% tariff increase on goods from China can mean the difference between profit and loss. These businesses often lack the scale to negotiate better shipping or production deals.
2. Harder to Compete
When big box retailers can buy in bulk and navigate supply chain hurdles, smaller businesses are squeezed out of competitive pricing models. That can hurt brand growth and customer loyalty.
3. Forced to Raise Prices or Cut Corners
To survive, some small businesses are forced to raise prices (and risk losing customers) or reduce product quality. Neither option is ideal for long-term sustainability.
4. Strain on Innovation and Entrepreneurship
For startups and side hustlers, tariffs raise the barrier to entry. The very spirit of innovation and American entrepreneurship is threatened when global sourcing becomes unaffordable.
So, What’s the Solution?
Tariffs aren’t inherently good or bad—they’re tools. But like any tool, they need to be used wisely. Supporting domestic industries is important, but not at the expense of small business growth and economic flexibility. Policymakers must find a balance that protects both national interests and the entrepreneurial engine that powers the economy.
In the meantime, small business owners must stay agile: exploring new supplier relationships, optimizing logistics, and diversifying product lines where possible. Because whether tariffs stay or shift, resilience will always be the most valuable asset a business can own.