President Donald Trump's trade war is squeezing small business owners as increasing costs for the materials they need cut into their profits.
Many larger companies absorbed higher costs from the president's tariffs without passing the difference on to consumers, but smaller businesses often lacked the money and storage space to stockpile materials before the levies kicked in — and they fear raising prices could alienate customers, reported The New York Times.
“It’s hard to breathe,” said Brandon Mills, chief executive of Las Vegas-based Total Promotion Company.
Mills, whose company makes promotional products and custom apparel, imports many of his materials from China, and since the tariffs snapped into place, he has laid off one of his seven employees, asked a bank to extend a line of credit so he could continue paying his bills, and raised prices on some items.
“It’s difficult to have to survive because of poor policy,” Mills said.
A recent analysis by the Federal Reserve Bank of Atlanta found 86 percent of companies import goods by sea and have fewer than 50 employees, and those smaller firms typically import materials from just one supplier and one country, which puts their profits at risk from sharp increases in tariff-related costs.
“It’s just a matter of time before some businesses that are right on the margin anyway are having to scale back,” said Andrew Chamberlain, the principal economist at the payroll services company Gusto.
Gusto's annual survey, conducted in August and September, found 50 percent of their customers thought tariffs had hurt their business this year, and 56 percent expected them to do so next year.
“We don’t have that same buying power or negotiating power that a lot of large corporations have,” said Lori Andre, who owns Lori’s Shoes in the Chicago area. “It’s small independents like us that are really feeling the squeeze.”
Andre started her company 43 years ago, and she's struggling to keep her company afloat through the president's trade war, which cost her $7,400 in duties on fall orders from Italy – twice as much as those materials cost last year.
“When we look at the total picture, we are going to survive,” Andre said. “Will we make as much profit? No, we won’t.”
