President Donald Trump‘s announcement of new tariffs on April 2 sent shockwaves across global financial markets and continues to weigh on market sentiment. Economists are now warning of an increased risk of recession as nations respond with retaliatory duties against the US. JPMorgan Chase (NYSE:JPM) in April raised its odds of recession to 60% from 40%, citing supply-chain shocks due to tariffs.
Tariffs and trade wars between major countries are now taking a real toll on businesses. An entrepreneur in early April asked small business owners on Reddit —particularly those importing products and raw materials— how they are navigating the impact of tariffs.
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The original poster said he’s been selling pottery products imported from Poland for the last 20 years. He said European products are subject to tariffs of around 20%, and that puts his business in jeopardy. Asked if he could move production to the US, the Redditor said he’s selling a traditional Polish folk art product that cannot be developed elsewhere.
“Our product is a want not a need, so we can raise the price but our customers may just stop buying,” he added.
His post received over 250 comments, with many small business owners sharing the problems and concerns they are facing due to new tariff policies.
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A small business owner called Trump’s tariffs a “disaster” as the core raw material for his business is subject to 25% to 46% duties. He said he’s is unable to operate a domestic manufacturing plant for raw material in the US because Americans are “simply unwilling to do this job anymore.” He said immigration-related restrictions are also causing difficulties for him to find the necessary workforce.
“The concept of trying to encourage domestic production by creating tariffs while also pursuing immigration policies that make finding a reliable labor force in the US impossible is just nonsensical,” he added.
Another commenter said he will probably go out of business and is unable to do anything about it.
“We’re heading towards a major economic disaster. Not much I can do about any of it,” he wrote.
Another Redditor commented that he’s closing his business due to the impact of tariffs and has stopped placing any new orders. Since his production operations are in China, tariffs have made his wholesale business “untenable” due to their impact on margins, he added.
“Not to mention unpredictable consumer behaviors and people holding their wallets closer and being less likely to purchase non-necessary goods,” he wrote. “Buying into new inventory just seems like a liability for us at this point.”
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Some business owners said they are planning to pass on the impact of tariffs to customers with higher prices. One Redditor said he is making a plan to roll out new prices for his customers that would reflect the impact of tariffs. He also believes the US lacks the necessary infrastructure and labor to develop the products he imports.
“The companies that do perform those processes in the US are running 2 year backlogs and only support the multi-billion dollar OEMs anyways,” he said.
A Redditor who runs a commercial trucks parts business said he’s preparing a strategy to deal with the impact of tariffs on his incoming shipments from China. He invested to source more inventory before tariffs went into effect and was also considering India as an alternative for manufacturing because he has a production facility in the country:
“We have our India factory, which got hit with 26% today. That’s better than now 67% on China plus an additional 25% due to auto parts category,” he said.
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This article ‘Major Economic Disaster’ Amid Trump Tariffs: American Small Business Owners Face Closures, Price Hikes, And Losses originally appeared on Benzinga.com
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