President Trump’s tariffs are hitting US businesses hard, with small and midsize companies bearing the brunt of the burden.
According to the Census Bureau, these firms account for $868 billion, or about a third, of yearly US imports.
While they may be dwarfed by giants like Microsoft, Amazon, and Lululemon, small businesses rely heavily on Chinese manufacturing and are not well-equipped to manage the financial turmoil caused by these tariffs.
A recent PYMNTS Intelligence report revealed that nearly one in five small-to-midsize firms are pessimistic about their chances of survival over the next five years.
Additionally, just under 7% of all firms surveyed, and 13% of those without access to financing, believe they are unlikely to survive the next two years.
Many owners of these small businesses have shared their fears with The Post.
Isaac Larian, chief executive of MGA Entertainment, known for brands like Bratz dolls and L.O.L. Surprise, expressed his doubts about having voted for President Trump.
“Frankly, I’m getting angry,” Larian said, reflecting on the impact of tariffs on his Los Angeles-based company.
In just two weeks, MGA has paid nearly $10 million in tariffs to import its merchandise from China.
This financial burden has forced Larian to put a hold on plans to expand a factory in Hudson, Ohio, which currently employs 700 workers.
“We were going to break ground later this year, but we have to put it on hold,” he stated, mentioning potential layoffs for some of those workers.
The price of Bratz dolls, currently selling for $15, is expected to reach as high as $30 by the holiday season.
Larian estimates that at this rate, the company could lose up to 40% of both its sales and profits this year.
The toy industry has been actively lobbying for an exemption from the 145% tariffs on goods made in China, a move Larian views as unfair given recent carve-outs for tech companies.
“Big companies like Apple have the money and clout to get Mr. Trump’s ear,” he remarked.
Feeling the weight of the tariffs, Larian reached out with a heartfelt message to President Trump.
“You are a great man and you love the USA. I am a big supporter of you,” he began,
adding, “We have invested tens of millions of dollars to expand and plan to do the same and make more toys in the USA.
We have now put that on hold because of tariffs, as our sales are declining big time because of them.
Please come and visit our factory in Ohio. It will be a great honor.”
Larian’s plea continued with an urgent request: “Please exempt toys from tariffs. We only have 255 days left till Christmas.”
In Wisconsin, Wonderstate Coffee was also feeling the impact.
Before the tariff wars began, the coffee distributor was poised for a 15% growth this year, with plans to invest $300,000 in new packaging equipment and open its fourth café.
Now, the company, which supplies supermarkets and restaurants across the Midwest, is seeking to secure an expanded line of credit as it grapples with an additional $20,000 in tariffs for a shipment from Ethiopia.
“We have a fear that we’ll be in a cash crunch,” said CEO TJ Semanchin.
He noted that while layoffs are not currently in the plans, the firm may have to cut its employee profit-sharing program.
Despite a recent 90-day pause on reciprocal tariffs, Wonderstate still faces a 10% increase on everything it imports from overseas.
“This increase on all of our costs is still a massive disturbance for us,” Semanchin lamented.
The extra $20,000 in tariffs also comes with a $4,000 interest cost due to borrowing for the duties, adding to the stress on the company.
“We’re witnessing these swings of tens of thousands of dollars from day to day, which is making us less hopeful,” he continued.
In California, Tarptent Inc. is facing its own challenges due to these tariffs.
President Henry Shires revealed that the Nevada City-based company, which produces lightweight tents and outdoor gear, has had to suspend all operations at its Hong Kong factory.
“With the recent increase in tariffs to 37.5% from 7.5%, we’ve recently paid over $51,000 in levies, which is a drastic rise from the $10,000 we would have paid previously,” Shires informed.
Generating around $2.5 million annually, he warned that if tariffs remain unchanged, revenues could plummet to under $1 million.
“Although we currently have enough inventory to get through summer, we won’t have enough stock to stay open into fall if the tariffs don’t change,” he cautioned.
“If that happens, we may have to shut down or redefine what we support in the industry.”
Meanwhile, Vikre Distilling in Duluth, Minnesota is feeling the pressure from vendors as they await pricing updates on supplies ranging from corks to labels.
Owner Emily Vikre shared that while they have managed to make vodka, gin, and whiskey for a decade, recent sales figures show a concerning drop-off.
“We’ve seen a pullback because consumers are being more conservative about their spending,” she commented, noting that retail customers are now hesitant to place orders.
With rising prices expected due to tariffs, Vikre may have to consider scaling back warehouse and retail space as costs become unmanageable.
Sarah McDonald, co-owner of Out There Outfitters, an apparel store in Wayne, Pennsylvania, expressed growing fears for her business.
She conveyed to The Post: “Honestly, when the tariffs were announced, it felt like every small business in America was told they will probably have to go out of business.”
Higher prices resulting from tariffs will inevitably be passed on to consumers, she noted, adding that the uncertainty surrounding when and at what rate tariffs will be implemented adds to the anxiety.
“The pace of change has been extreme: prices, numbers, and dates are shifting all the time,” she added.
In Clearwater, Florida, Jay Kamhi of Kamhi World is also feeling the strain of increased tariffs.
“My understanding is that there’s a rationale behind the tariffs due to past imbalances,” he stated, with his toy company exclusively importing from China.
However, the looming tariffs could increase costs from roughly $1 million to about $1.5 million.
“If we have to pay $1.5 million in penalties or tariffs, we will see no profit and potentially lose money; it’s simply not sustainable,” Kamhi lamented.
Faced with the prospect of a production shift to Vietnam or Mexico, Kamhi acknowledged the complexities involved.
Many factories are currently occupied, and his specialized molds for toy production are difficult to transport.
Although he has explored US manufacturing options, the costs are prohibitively high.
“Even if there were available facilities, it would cost about 10 times more,” he explained.
Kamhi also highlighted the personal impact on his employees, explaining that layoffs are not an option due to close family ties in the company.
“Each one of these people’s families depend on this company’s success,” Kamhi said, detailing an emotional call he received from his daughter about the uncertainty of their situation.
As these small businesses navigate the challenging landscape shaped by these tariffs, the future remains uncertain, with many standing on the brink of survival.
The anxiety felt by company leaders across various industries underscores the broader implications of trade policies on small businesses that often lack the resources to weather such unprecedented storms.
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