How Small Business Can Navigate the Tariff Crisis

Tariffs? They suck. And they’re nothing new. But if you act now, you can get your business ahead of them. In fact, this could be the opportunity you’ve been waiting for.

Tariffs are nothing new

Tariffs date back to at least 2,000 BC in Mesopotamia and ancient China, where rulers taxed goods moving along trade routes. The Roman Empire also used tariffs to control trade and fund military expansion.

Fast-forward thousands of years later, and we’re still doing the same thing. The difference? Today, news travels in milliseconds, not months. The impact of tariffs hits businesses almost instantly.

What IS a tariff?

A tariff is a tax on imported goods. Raw materials (think steel and aluminum), products (think cheap stuff from China), and even services can be affected.

Here’s how it plays out:

• A T-shirt from China costs $10.

• Shipping is $5 (even if it says “free shipping,” you’re still paying for it).

• Now it’s $15.

• The U.S. slaps a 10% tariff on it—another $1.50.

• That T-shirt now costs $16.50.

Who pays that extra $1.50? Either:

1. You – the customer absorbs the cost in higher prices.

2. The manufacturer – they make the product cheaper (lower quality, worse materials, or cheaper labor).

3. The business – they eat the cost and risk going under.

The bottom line is that tariffs mess with free trade and raise prices for everyone.

Tariffs are back (again)

2025 started with President Trump imposing tariffs on imports from Mexico and Canada and a 10% tariff on Chinese goods. In response, Canada and Mexico hit U.S. products with their own 25% tariffs, though they have since paused the implementation of these tariffs for the next month. China retaliated with up to 15% tariffs on U.S. energy imports and an antitrust investigation into Google.

That means higher prices for avocados, beer, electronics, and gasoline, and that’s just the start.

What happens next?

Short-term: Prices go up. You’ll pay more for imported goods. Trade retaliation happens as other countries slap tariffs on U.S. products. Uncertainty increases as businesses delay decisions and markets react.

Long-term: The economy slows down as trade wars make industries less efficient. Job shifts happen. Some jobs get saved, but others, especially in exporting industries, disappear. Everything gets more expensive because less competition means fewer choices and higher prices. The government makes money on tariffs, but it’s an unreliable way to fund anything.

Can tariffs work?

Yes, but historically, only in very specific situations.

They can be used as a bargaining chip (that’s likely what’s happening now). Governments slap tariffs on each other, then negotiate to fix the real issue.

They can also be used to boost an industry like Japan did in the 1950s -1980s, protecting their tech and auto industries until they could compete globally. Now, Toyota, Nissan, and Honda are synonymous with quality.

Most of the time, though, tariffs slow innovation, and increase prices, and the customer pays for it all. So, this is the time to act.

What should your small business do now?

1. Diversify suppliers. Don’t rely on one country for materials. Always have backups. This is good business practice, tariffs or not.

2. Negotiate with suppliers. Your suppliers may be able to absorb some costs or offer discounts. Tariffs are country vs. country, not business vs. business. Work with your international partners.

3. Adjust pricing strategically. Don’t raise prices all at once. Step up slowly in tiers. Communicate with customers so they understand what’s happening and why. You were hit with a tariff- your customers shouldn’t be caught off guard.

4. Stock up before tariffs hit. If you can afford it, buy before prices go up. Extra supplies mean you can continue producing at pre-tariff rates, giving you a competitive advantage. While competitors are raising prices, you can hold out longer and win their customers.

5. Optimize operations. Cut waste, improve logistics, and automate where possible. Let tariffs be the force that pushes you to improve your business. Leverage AI, streamline operations, and eliminate inefficiencies.

6. Apply for tariff exemptions. Research ways to legally bypass tariffs and gain a competitive advantage. If you get an exemption and your competition doesn’t, tariffs could become your greatest ally.

7. Stay informed and advocate. Join industry groups and make your voice heard. Think Chamber of Commerce and industry associations—a lot of loud voices can persuade even the most stubborn government to act.

Maybe today’s tariffs go away tomorrow. But tariffs as a whole aren’t disappearing anytime soon. So prepare accordingly. Don’t be a victim. Let your competitors do that part for you.

I wish you health and wealth.

-Mike