Chaotic tariff system and trade war burden small companies
Small companies are the backbone of the US economy. These domestic companies are exactly what President Donald Trump tries to protect with his “America First” trade agenda. But for many small business owners, the years of hard work and the optimistic perspective have dissolved into air overnight.
rising tariffs burden entrepreneurs
The first week of April marked the climax of two years of hard work for Katharine Burke: The first line of her self -care products under the name Purryfuls went into production. But at the same time this week brought massive tariffs to imported goods from China, where Burke's products are produced.
an uncertain business growth
Melanie Abrantes, which has been running her company of the same name for handmade products for eleven years, faces the challenge of ordering more handicraft tools, cork and other raw materials to support the steadily growing subscription cut club. However, the uncertain and frequently changing customs situation means that the prices for unique articles from countries such as Japan and Portugal rise.
The effects of trade policy
The unpredictable nature of President Donald Trumps Handelspolitik Tillers have significantly impaired the smallest company business in the United States. Increasing costs destabilize long-term supply chains, suffocate growth and expansion plans and threaten the existence of American companies.
"I am fully invested in this matter, and the first thought that came to me was: 'I'll lose my house. My boys will not have a place to live'," said Benike.
These and other small companies see themselves in the cross -fire rising trade conflicts. Despite their efforts to produce their products in the USA, they are forced to use imported goods because the opportunity to procure and produce native or in many cases does not exist.
The challenge of American production
"I tried to produce in the USA because I thought it would be easier to work with someone on site, but there has not been - for decades," said Burke, who ultimately added a manufacturer in China to use her cuddly toys for self -care to design, test and manufacture for adults.
"[China] has been invested in the development of systems, equipment and the training of a workforce for decades. There is the industry there; that does not change overnight, no matter how much you want."
economic growth at risk
Small companies could be the early warning systems.
You have the greatest direct risk through the tariffs, Gus Faucher, chief economist of the PNC Financial Services Group, told CNN. Small companies usually have only low scope in their margins and cannot simply compensate for the increased costs as large companies. Capital is not so easily available, which makes small companies more susceptible to external threats.
"If you are Walmart, you may be able to say to your supplier that he should keep the prices stable," he said. "But if you are a small business owner, you don't have this scope."
If small companies collapse, this could cause a "significant economic setback", Faucher warned.
A hard market for new companies
Burke has spent the past two years to build up their company and create purryful, a cozy plush toy that is supposed to help stressed millennials and genes.
The company emerged from a stressful situation: Burke, who worked in the high-pressure technology industry, was about to burnout and needed relaxation. She turned to her cat Wren for consolation, but the emotional support of the four -year -old Siam cat was not always available.
So she decided to create a self -care product based on Wren. Last month she presented Purryfuls at the New York toy fair. After receiving a lot of recognition and numerous pre -orders, Burke gave the green light for production.
The first line of Purryfuls was manufactured in the same week in which the massive "liberation day" -zölle -and the levies to Chinese imports quickly rose to 145 %.
"It went from 0 %to 20 %, and I think then came 80 %, then 125 %and now 145 %," she said. "While I pursue the news about these tariffs, I also see that tariffs suddenly pop up and then be exposed or put aside, in order to come back again. It is really impossible for a company to adapt as quickly, especially for such a small company as mine."
Burke expressed concerns that the tariffs could ruin their business before starting. Nevertheless, although Purryfuls is the "smallest of the small companies", she did not intend to give up. "I am not ready to give up something that I worked on for two years if the situation could change in a few hours or days," she said. "I hope that things will change in a few weeks, because then the [Purryfuls] will come."
a chaotic environment for entrepreneurs
When Trump announced a 90-day break of the steep and variable "mutual" customs duties for dozens of US trading partners (while a flat-rate customs of 10 % remains), this abranted the abrant. She is a designer from Oakland, California, the carving tools from Japanese artisans and raw materials from countries such as Portugal where Kork is plentiful.
"I am half-portuguese, so I wanted to have a direct connection to my own inheritance and my own experience and use a material that says a lot about my own story," she said. But the materials that melanie abranted abranted designs can soon become more expensive.
"I tried to speed up as many orders as possible to get them through within this 90-day window," she said. "Nevertheless, there is definitely a persistent feeling of uncertainty."
and the costs are already starting to rise, she added. Your US-based packaging suppliers receive materials from China and had to increase prices. Abrantes have not yet done this itself, but announced on Instagram that in the future it would have to pass on the higher costs due to the larger tariffs. "It was so chaotic; it changes every day and it feels like I couldn't really keep up," she said to CNN. "So it was difficult to prepare for it."
"I want to invest in my business and my future, but everything feels unknown, and it is difficult to make decisions if you are not sure what will happen."
The support for small companies is missing
Everything seemed to come together for Busy Baby, a company that develops products that prevent baby items from falling on the ground. In autumn 2024, the company with Target and Walmart completed the company in Oronoco, Minnesota, to sell for paved baby table ceilings and other accessories in 250 shops in the USA. And while these sales gain momentum, Benike orders a container full of products from her long -time manufacturer in China.
But on Friday the order already paid for over $ 158,000 in the camp of its manufacturer, which is 7,500 miles away. This is because Busy Baby, when it is shipped to the US coast, would have to pay an additional $ 229,100 in order to cover the 145 percent customs costs. Benike started a crowdfunding campaign to try to cover the costs.
The concerns extend far beyond the short -term period, she explained. The contracts with Walmart and Target were concluded at a time when the tariffs were 0%, and the conditions contain fixed prices. The container is also waiting for the summer stock. The next order from Busy Baby would be for the critical holiday season.
"I'm afraid to start with the production for [the fourth quarter] what we would normally do now," she said. "About 40 % of our annual sales come in the [fourth quarter], and to meet these orders, we now have to start production."
But the situation is far too unsustainable to make this decision, she added, and it checks all options, including relocating her sales to countries outside the USA. It also contacts members of the congress in order to make the emergency of its company and other small businesses clear, which in their opinion are neglected by the government, especially since Exceptions for smartphones, electronics and computers-products that were not founded for the business of large technology companies, including those that are not found in America.
"We don't feel supported by our government as a small company," she said. "For me, as a military veteran and a small American company, I am in danger of going completely out of business because the tariffs are so high that I can impossible to bring my products into the country to sell them."