Trump’s tariffs govern American businesses all over the board, but it’s the small businesses that really put it on their jaws.
Small businesses account for $868 billion, or about a third of US imports, per year, according to the Census Bureau.
These companies are smaller than those of Microsoft, Amazon, Lululemon, but rely on Chinese manufacturing, but are far less capable of handling such fine messes.
One in five small businesses are pessimistic about their potential survival over the next five years, according to a new report from the PYMNTS Intelligence Report.
Less than 7% of all companies surveyed, and 13% of companies that have no access to fundraising, thought they would rarely survive for the next two years.
Some of these small businesses heads told the post about their fears:
Little teak
Isaac Larian, CEO of MGA Entertainment, voted for President Trump in November, but I don’t know if he’s made the right decision recently.
“Frankly, I’m mad,” says Bratz Dolls, Lol Surprish and other toy makers of extremely popular items.
In just two weeks, the Los Angeles-based company paid nearly $10 million in customs duties to import goods from China into the US.
This overwhelmed MGA’s small teak line plans for toddler toys. It expands its factory to Hudson, Ohio, which currently employs 700 workers, among the few US toy makers that own the factory here.
Instead, the MGA may have fired some of those workers, Larian told the Post.
“We were going to break the ground later this year, but we have to put it on hold,” Larian said.
Meanwhile, the Bratz Dolls, which currently costs $15, could cost as much as $30 for Christmas. At that rate, the company will lose up to 40% of its revenue this year and 40% of its profits, Larian said.
The toy industry is lobbying for a 145% tariff exemption on goods made in China, he added, and it considers sculptures by high-tech companies to be unfair over the weekend.
“Big companies like Apple have the money and influence to grab Trump’s ears,” Larian said.
Amazing coffee
Before the tariff war, Wonderstate Coffee was on track to grow 15% this year. The Java distributor was preparing to open a fourth cafe after investing $300,000 in new packaging equipment in Madison, WIS.
The company, which currently supplies supermarkets and restaurants to the Midwest, is talking to bankers to expand their credit as it can pay an additional $20,000 in tariffs on shipments of Choice Beans coming from Ethiopia.
“We fear it will become a cash crunch,” posted Wonderstate TJ Semanchin. “We’re beginning to question whether it’s time to invest in growth.”
Semanchin said he has no plans to fire employees, but he may have to cut employee profit sharing programs.
Last week’s 90-day suspension at mutual tariffs did not spare importers.
“A 10% increase in all of our costs remains a major hindrance for us,” Semanchin said. “These tens of thousands of dollars of each day have no hope for us. It’s sinking into the way that it hits real costs.”
In addition to the $20,000 tariff, Wonderstate will have to pay around $4,000 in interest to borrow money for its duties, Semanchin said.
Talpent
Tarptent Inc. – The Nevada City-based company that manufactures lightweight tents and other outdoor and camping equipment relies on three manufacturing facilities. One is in Hong Kong, the other is in Vietnam and the third is in mainland China.
“As of today, we had to suspend all operations due to tariff rates,” the president of Tarpent Harry Shires told the Post at the Hong Kong factory. “I don’t know where we’re going next.”
Shires said the company must recently pay taxes of more than $51,000 as the tariff rate rose from 7.5% to 37.5%.
The company generates around $2.5 million a year, he added. If there is no change to the tariff front, that number will fall below $1 million, the Shires said.
Shires said the company currently has enough stock to sell until summer, but “we don’t have enough stock to stay open,” and if tariffs are properly placed, there is enough stock to enter the fall.
At that point, Talpent “will either shut down or be strictly redefine what we support in the industry,” Shias said.
Vicle Distillation
Vikre Distilling is waiting for a response from a vendor that offers everything from corks, labels and bottles.
Distillers, Duluth, Minnesota, has been making vodka, gin and whiskey for the past decade and have struggled to raise prices at the peak of inflation in the past few years.
“Sales have dropped significantly,” said owner Emily Vikle. He said bar, restaurant and retail customers are also cutting orders significantly.
“Since the beginning of the year, we’ve been looking at pullbacks as consumers are more conservative about spending,” Vikre told the Post. “But now, our retail customers are stopping orders. They are worried about staying in a lot of stock.”
Vikre is helping vendors raise prices again due to customs duties. For example, her label makers rely on imports from China to glue labels to glass bottles.
If price hikes are uncontrollable, Vicle is considering returning some of her warehouses and retail space to the landlord.
The costumes there
Sarah McDonald, co-owner of an apparel store in Wayne, Pennsylvania, posted that she may need to fire some of the 15 people she employs.
“To be honest, when the tariffs were announced, I felt like they were basically told that every small business in America would probably have to go out of business,” McDonald said.
She added that tariffs are likely to mean higher prices, and that it will be handed over to consumers.
In addition to uncertainty, she said, how fast and at some point the tariffs will be enforced.
“How high the tariffs were very extreme,” McDonald added:
The world of Kamhi
“I understand the rationale behind the tariffs. There was an imbalance,” said Jay Kamhi, founder of Clearwater, Florida-based Kamhi World, Mr. We sell Predictor Fortune-Telling Toy.
Amazon sellers, which import all custom toys from facilities in China, have temporarily suspended all overseas manufacturing. That’s because tariffs can now send his fall and holiday delivery costs at around $1 million, up to $1.5 million.
“If we have to pay a $1.5 million penalty or tariff. We don’t make a profit. We lose money. It’s not sustainable due to the spread of our imagination and there’s no place to go,” Kami told the Post.
The company is considering a production shift to Vietnam or Mexico, but “you have to get these big, expensive molds sitting in China and find a way to transport them. You have to find a factory that will do that. For example, we don’t have the space for you.”
Kamhi has been considering US manufacturing in the past and would like to do so, but the specialized molds and electronics that fit into his toys are only available overseas. Even if the capacity of a US facility is there, it would cost about 10 times more.
Layoffs are not an option for Kamie. Kamhi World’s Marketing Director is engaged in Kamhi’s daughter. His operational employee is married to his other daughter. The company’s executive director is his father’s friend with Kami–hee – has been in the Kamhi world for 15 years.
“Each of these people – their families depend on what this company is doing well,” Kami told the Post. “I’m afraid that literally all these people don’t have the money to support their families overnight. My daughter was crying and crying two weeks ago, ‘Dad, how do you get through this?”
