Small businesses are anxious over lack of clarity on tariffs

Small businesses have been riding a tariff roller coaster over the past month, causing them grave concern and trepidation.

The chaotic and unpredictable nature of tariff negotiations have caused the small business community great uncertainty, as small businesses attempt to navigate the changing landscape.

Small businesses pay increased tariffs, and the nature and extent tariffs are increased may curtail their operations or cause them to pass increased costs on to their customers. Small businesses will attempt to adjust and meet the moment, but this has been made increasingly difficult by the lack of clarity around how tariffs will be implemented.

This piece is not meant to be political or even take a position as to whether increasing certain tariffs is sound economic policy. The focus is on small businesses and their ability to plan, pivot and adjust to higher tariffs so quickly and with moving goalposts. If tariffs are raised, it should be done slowly, deliberately, and predictably, so small businesses have time to establish new supply chains and understand the best moves to make.

Why will higher tariffs have such a profound impact on many small businesses?

For starters, small businesses forced to find new suppliers will not have the negotiating power of their larger counterparts. While big companies can use bulk orders to negotiate better prices, small businesses scrambling to find new vendors likely will pay more because they cannot order in large quantities.

Many small businesses also do not have the means to stockpile goods to offset tariffs. They also do not have the staff and resources to quickly change vendors and establish new supply chains. This is a significant undertaking, and it is difficult to fathom how small business owners can balance running their businesses with preparing for the consequences of an unpredictable trade war.

Small businesses also will be hurt because unlike some larger companies, many small businesses will be unable to absorb higher costs and will have no choice but to raise prices. For example, craft breweries and local restaurants could lose customers because their prices no longer will be competitive. Small businesses may have to choose between smaller margins or fewer customers because of higher tariffs. Small businesses that export goods also will be impacted because other countries have threatened retaliatory tariffs against U.S. companies.

While some higher tariffs already have been enacted, it appears April 2 will be the day more tariffs will be imposed against many of our trading partners. There’s a threat every tariff will be countered by another, and a trade war will have a profound impact on small businesses.

Small businesses need time to plan for tariffs. They also need certainty and predictability to properly prepare. Small businesses drive our economy, create jobs and support local communities. They should not be collateral damage in a trade war.

• Elliot Richardson is co-founder and president of the Small Business Advocacy Council.