For some small businesses, the last week brought even more twists and turns to the past two months of President Donald Trump’s chaotic tariffs.
The situation was already confusing, with stops and starts of tariffs at different levels. Then on Wednesday, a US court said Trump overstepped his authority in imposing most of those import levies – only for an appeals court on Thursday to pause the previous court’s ruling.
The confusion has made it challenging for some small companies to plan, business owners told CNN. In certain cases, they have had to consider changing their product strategy, looking into shifting their supply chains, reducing staff hours or delaying products.
“My fear is, if this continues, there’s going to be like the mass extinction of small businesses,” Julie Robbins, CEO of Ohio-based guitar pedal maker EarthQuaker Devices, told CNN.
Trump announced blanket tariffs across the globe on April 2, and since then, his plans have changed on a regular basis.
In early April, he issued a 90-day pause on reciprocal tariffs almost everywhere except China. Then, after ratcheting up total tariffs on Chinese imports to 145%, he declared smartphones and certain other electronics would be exempt from the reciprocal tariffs. The US and China agreed in May to roll back reciprocal tariffs for 90 days. And in late May, he threatened smartphone makers like Apple with 25% tariffs if they don’t make their phones in the US. He also agreed to push back levies on imports from the European Union until July 9.
Those are only some of his changes, which can come at any time of day via the White House, social media posts or other avenues.
The whiplash has been hard for companies to keep up with. Even major brands like apparel giant Gap are feeling the impact of tariffs, but small companies with far fewer resources are in an even tougher spot. The National Federation of Independent Business Small Business Optimism Index fell by 1.6 points in April, dipping below the 51-year average for the second consecutive month. The organization’s chief economist, Bill Dunkelberg, cited uncertainty as a “major impediment” for small business owners in a press release.
“It’s the sort of more smaller, kind of more niche… brands that are going to really, really get hit by this,” Jack Leathem, an analyst at market research firm Canalys, told CNN in April.
Some small business owners have had to make difficult decisions as they’ve grappled with the impact of tariffs. EveAnna Manley, whose company Manley Labs makes high-end electronics for recording studios, has had to cut her employees’ hours by 25%.
The reciprocal tariffs that China imposed on the US have been particularly challenging, she says, since China has become a major market for her business. Manley says it took “decades” for her to “get the best Chinese importers.”
Overall, Manley Labs’ sales are down more than 19% compared to last year, she told CNN, which has frozen the company’s product development efforts.
“It’s just a freaking mess right now,” she said in late May, before this past week’s court rulings on Trump’s tariffs. “And I’m so angry that my own government has done this to me.”
The best thing small businesses can do right now is to be flexible and diversify their sourcing and procurement strategies, says Tala Akhavan, chief operating officer of Pietra, a platform that helps brands with sourcing, production and logistics among other services.
That’s what Intuition Robotics, which makes a home robot designed to be a companion for older adults, is doing, according to chief strategy officer Assaf Gad.
The company also makes money off its digital subscription accounts, according to Gad, giving it the flexibility to look into a “plan B” outside of China for producing the company’s hardware. Sudden changes in tariff policies haven’t really impacted the company’s decisions because it’s planning for the next nine to 12 months rather than the short term, he said in mid-May.
Trump’s tariffs have encouraged Gad to think about expanding Intuition Robotics into international markets.
“Maybe this is also a good time to say, ‘Let’s not put all the eggs in one basket,’” he said, “and, you know, start looking on other kind of territories that will reduce the risk for us going forward.”
But for some companies, finding a plan B isn’t so easy. That’s the case for Sarah O’Leary, CEO of Willow, which makes wearable breast pumps and accessories. As a medical device company, Willow can’t simply just move its manufacturing, O’Leary told CNN. The company had to pause exporting one product it produces in China for postpartum recovery at one point because it became too expensive.
The ruling on Wednesday aiming to block many tariffs brought some relief, O’Leary said in an emailed statement on Thursday evening. But she acknowledged that there’s still “so much uncertainty,” adding that “the chaos will persist.”
Any tariffs, even low ones, would be difficult for a small company like hers to absorb, she said in mid-May.
“We don’t build our products with that much margin,” she said. “And so, unfortunately, we are in a position where we have to evaluate what we can do to survive in those contexts.”
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