NRF has launched a new video series, "Tariffs hurt small businesses," highlighting the impact of tariff-focused trade policies on small retailers. Ninety-eight percent of retailers are small businesses, supporting over 13 million jobs nationwide. This series amplifies their voices through the stories and insights of four small business owners from across the United States.
Retailers typically plan their inventories six to nine months in advance to meet seasonal demand. However, unpredictable and rapidly changing tariff policies are making it nearly impossible to forecast costs, place orders and manage supply chains effectively.
“Uncertainty is like kryptonite to a business,” says Ben Knepler, founder of True Places, an outdoor utility chair company in Wallingford, Pa. Knepler is struggling with making key businesses decisions to grow his business because of the unpredictable nature of tariff announcements. “You can’t make any kind of investment decision when you don't know what the world is going to look like tomorrow,” he says.
Jared Hendricks, who runs Village Lighting Company in West Valley, Utah, echoes that sentiment. He is facing significant financial strain to stay afloat amid rising costs, and fears he will not be able to afford the unexpected, high tariffs on the Christmas lights and holiday decorations he needs to sell to customers this upcoming holiday season.
“What are we going to do? We can’t afford this,” he says. “My house is leveraged on that first payment just to get inventory in, so I can hopefully sell enough to pay back the loan that covered the tariffs.”
Many small businesses want to manufacture and source products locally, but it’s not that simple. Retailers rely on complex global supply chains, set up over decades, to manufacture and assemble many of the products they sell.
“I'm never going to happen in the USA. My factory can't be here,” Hendricks says. Over 200 people work in multiple factories overseas creating component parts and assembling the holiday merchandise he sells. Even if a factory could be built in the U.S., Hendricks foresees significant challenges finding qualified employees to work in them. “I can't even find two to three people to work in my own warehouse,” he says.
Ross Harrow, owner of The Flour Shop, a California bakery known for its sprinkle exploding cakes, says that even when tariffs aren’t paid directly by the importer, the costs still find their way down the supply chain. “My suppliers pay those taxes upfront, and they pass that cost along to me,” he says. “That forces me to completely rework my margins and product pricing.”
Knepler believes these policies are undermining the very spirit of American innovation because tariffs are forcing innovative businesses to focus on survival due to increased costs, instead of being able to grow and innovate. “When people think of America, they think of innovation and entrepreneurial spirit,” he says. “But these policies are literally undermining the very essence of what it means to be an American business owner.”
Tariffs not only raise prices but cause ripple effects across retailers’ businesses and the overall economy. Knepler says that while his company handles everything from design and engineering to marketing and customer service in the U.S., manufacturing and assembly must happen overseas. “We do almost everything in the U.S., except for manufacturing and assembly,” he says. “And sometimes it feels like the rest of the economy has forgotten us.” Just because production happens abroad doesn’t mean these businesses aren’t vital contributors to the American economy.
Dewar Gaines of Gaines Family Farmstead, a pet treat company in Huntsville, Ala., is particularly concerned about how tariffs affect the retail partners who sell his product. “Around 40%–50% of pet products sold in the U.S. are sourced overseas. When tariffs hit, shelves go empty. That affects their ability to operate, and at scale, it affects us too.”
Small businesses are particularly vulnerable to the negative impacts of record-high tariffs. Learn more.
Gaines hopes lawmakers will take a broader view when crafting trade policy. “I hope policymakers consider more than just the immediate revenue from tariffs,” he says. “They need to think about the long-term impact on small businesses and the broader economy.”
Learn more about how tariffs are impacting small businesses at NRF’s Tariffs Threaten the American Dream landing page.
