What Tariffs Are Really Costing Small Businesses Right Now

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Geopolitical Risk

James runs a small furniture shop outside Wilmington. About half of what he sells starts as wood, hardware, and upholstery fabric shipped in from overseas suppliers. Every few months, a new tariff rule changes what his supplier charges him, before he ever gets the chance to change his own price tag.

James is not alone. Tariffs have been reshaping the cost of doing business for small companies since President Trump began imposing them in early 2025, and the rules have kept shifting ever since instead of settling into place (Reason, 2026).

What’s Actually Happening

The Federal Reserve Bank of New York surveyed small businesses this year and found that most of them rely on imported materials, even if they never sell a single product overseas. About 70 percent of small goods producers and 80 percent of small retailers used imported inputs, while only about 30 percent of goods firms actually export anything (Liberty Street Economics, 2026). In other words, tariffs hit these businesses coming in the door, whether or not they ever sell a thing abroad.

The pain has not been spread evenly. In the survey, 55 percent of small goods firms nationally, and 62 percent in the hardest-hit regions, reported real financial difficulty tied to tariffs. For retail, it was 67 percent nationally and 72 percent regionally. Services firms felt it less, but still meaningfully, at 34 percent nationally and 44 percent regionally (Liberty Street Economics, 2026).

Why Small Businesses Feel It More

Large companies have lawyers who specialize in working around tariff rules, and cash reserves that can absorb a bad quarter. Most small businesses have neither. About 90 percent of small manufacturers import at least some of their raw materials or parts, and when a tariff raises the price of those inputs, there is nowhere else for that cost to hide (Reason, 2026).

Roughly 80 percent of the businesses in the Fed’s survey passed at least some of the new cost on to their customers through higher prices. About 60 percent absorbed some of it themselves, eating into their own margin instead. Many did a mix of both. Interestingly, older and more profitable small businesses were more likely to raise prices, while newer or thinner-margin businesses were more likely to just eat the cost and hope customers stayed (Liberty Street Economics, 2026).

The U.S. Chamber of Commerce has estimated that current tariffs amount to roughly 200 billion dollars a year in added costs for small businesses nationwide (U.S. Chamber of Commerce, 2026). A separate analysis from the Senate’s Joint Economic Committee, published by the committee’s Democratic staff, found that businesses with fewer than 10 employees lost about 292,000 jobs in 2025, about 4.5 times the job losses those same tiny businesses saw during the first year of the pandemic. That same analysis found construction firms lost about 18 percent in revenue and leisure and hospitality businesses lost about 15.2 percent, over the same stretch (Joint Economic Committee Democratic Staff, 2026). Worth noting, that report comes from congressional staff aligned with one political party, so treat the framing with that in mind, but the underlying job and revenue figures are drawn from real employment and business data.

Nothing Is Settled Yet

If you were hoping tariffs would stabilize soon, the news right now points the other way. As of this week, the United States and China are discussing cutting tariffs specifically on American liquefied natural gas ahead of a planned visit by China’s president, a sign that some tariffs are still very much on the negotiating table (Reuters, as cited in EnergyNow, 2026). At the same time, Canada’s dairy industry has been hit hard enough that sales have stalled, and the administration has threatened new tariffs on Europe if Canada joins the European Union as an associate member. Mexico, meanwhile, is working toward its own new trade deal and has said it plans to increase how much it buys from the United States (California Chamber of Commerce, 2026).

None of that is settled. And nearly half of the businesses that have already paid higher tariff costs say they plan to raise prices again over the next six months or more, just to catch up (Reason, 2026).

Why Tariffs Alone Won’t Bring Factories Back

Building factories back in America is often the reason given for these tariffs, and it is a real goal worth taking seriously. Tariffs can be part of getting there. But a large new factory commonly costs somewhere between two and six and a half billion dollars, depending on the industry, and takes two to five years to build before it ever makes a single product (Greenfield Consulting, 2026). No responsible business is going to spend that kind of money on a factory that will not be finished for years if it has no idea whether the tariff that justified building it will even still exist by the time the doors open.

Right now, that certainty does not exist. President Trump has changed tariff rates and targets by his own decision multiple times already, through executive action rather than lasting legislation, with no fixed, long-term plan that a company could actually build a factory around. Tariffs by themselves are not a reshoring strategy. Without a stable, predictable framework and real incentives for building here, on top of the tariffs themselves, businesses read the instability as a reason to wait, not a reason to invest. That instability is not a mystery with no author. It traces directly back to how the Trump administration has chosen to run tariff policy.

What This Means for Your Business

If any part of what you sell starts overseas, whether that is raw materials, parts, or finished goods, a few things are worth doing now. Decide ahead of time how much of a cost increase you would pass on to customers versus absorb yourself, so you are not scrambling to decide in the moment. Keep an eye on trade news involving the specific countries your suppliers are in, not just tariff headlines in general. And build a little more cushion into your cash reserves than you might have a year ago, since another price change could arrive with very little warning.

The Bottom Line

Tariffs are not a one-time event that small businesses just need to get through. They are an ongoing cost pressure that keeps shifting shape, and the businesses handling it best are the ones planning for more change, not waiting for things to settle down.

Please note: The observations and insights in this post are general in nature. The Muninn Group shares general analysis and observations in this Insights section. Specific strategic recommendations for your business require a direct engagement where your particular situation, market, competitive position, and financial reality can be assessed properly. Your first consultation is always free. The Muninn Group will not hand you a deck full of buzzwords.

Works Cited

Federal Reserve Bank of New York, Liberty Street Economics. “Effect of Tariffs on U.S. Small Businesses.” July 2026.

Reason. “Trump’s Tariffs Have Been Particularly Costly for Small Businesses.” July 13, 2026.

California Chamber of Commerce, Advocacy. “Trade Update, September 22, 2026.”

Reuters, via EnergyNow. “US, China Discuss Cutting Tariffs on US LNG Ahead of Xi Visit.” September 18, 2026.

U.S. Congress, Joint Economic Committee, Democratic Staff. “New Data: Trump Tariffs’ Impact on Small Business Jobs and Revenue.” May 2026.

U.S. Chamber of Commerce. “The Impact of Tariffs on American Businesses.” 2026.

Greenfield Consulting, via iFactoryApp. “New Manufacturing Plant Cost 2026: Full Breakdown by Industry.” 2026.

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Philip White is the Founder and Principal Consultant of The Muninn Group, North Carolina’s premier strategic consulting firm. He is an Economist, Political Strategist, Geopolitical Risk Analyst, and accomplished Public Speaker based in Wilmington, NC. Contact: havi@themuninngroup.com | 910-632-0431 | themuninngroup.com

Geopolitical Risk

Consider a regional furniture retailer whose product line depends on imported wood, hardware, and upholstery components. That business has never sold a unit outside the United States, yet its cost base has moved in near-lockstep with trade policy decisions made in Washington, Beijing, and Brussels since President Trump began imposing tariffs in early 2025 (Reason, 2026). This is the defining feature of small business tariff exposure through 2026: import dependence without export participation, and therefore without the offsetting benefits that trade policy is nominally designed to produce.

I. The Exposure

Data from the Federal Reserve Bank of New York’s Liberty Street Economics research series indicates that approximately 70 percent of small goods-producing firms and 80 percent of small retail firms used imported inputs in 2024, while only about 30 percent of goods firms engaged in any international sales activity (Liberty Street Economics, 2026). Separately, survey data indicates that roughly 90 percent of small manufacturers import raw materials or intermediate products used directly in production (Reason, 2026). The structural implication is that tariff exposure for the small business sector runs overwhelmingly through the cost side of the ledger, not the revenue side.

II. The Asymmetry

The burden is not distributed evenly, either between sectors or within the small business population itself. By sector, 55 percent of small goods firms nationally (62 percent in the most exposed regions), 67 percent of small retail firms nationally (72 percent regionally), and 34 percent of services firms nationally (44 percent regionally) reported material financial difficulty attributable to tariffs. Within that population, a further asymmetry emerges: older and more profitable small firms proved more willing and able to pass costs through to customers via price increases, while newer or thinner-margin firms were more likely to absorb costs internally, a strategy that erodes the financial cushion those firms could least afford to lose (Liberty Street Economics, 2026).

This asymmetry compounds a structural disadvantage already documented in the broader research: large firms retain legal and financial capacity, including specialized trade counsel and larger cash reserves, to mitigate tariff exposure in ways generally unavailable to small operators (Reason, 2026).

The magnitude of the resulting burden has been estimated from two independent directions. The U.S. Chamber of Commerce places the aggregate annual cost of current tariffs to small businesses at approximately 200 billion dollars (U.S. Chamber of Commerce, 2026). Separately, an analysis published by the Democratic staff of the Senate’s Joint Economic Committee found that firms with fewer than ten employees lost approximately 292,000 jobs in 2025, a figure the analysis characterizes as roughly 4.5 times the job losses those same micro-businesses experienced in 2020, alongside sector-specific revenue declines of approximately 18 percent in construction and 15.2 percent in leisure and hospitality over the same period (Joint Economic Committee Democratic Staff, 2026). That analysis originates from committee staff aligned with one political party and should be read with that provenance in mind, though the underlying employment and revenue figures are drawn from standard economic data sources rather than original committee research.

III. The Moving Target

Compounding the cost burden itself is the absence of policy stability. As of this week, the United States and China are engaged in discussions to reduce tariffs specifically on American liquefied natural gas exports ahead of a planned visit by China’s president, indicating that even settled-seeming tariff lines remain subject to active renegotiation (Reuters, as cited in EnergyNow, 2026). Concurrently, Canada’s dairy sector has reported stalled sales attributable to tariff pressure, the administration has threatened new tariffs on European goods contingent on Canada’s potential associate membership in the European Union, and Mexico is separately negotiating a new trade arrangement while signaling intent to increase its purchases of American goods (California Chamber of Commerce, 2026).

The practical effect of this continued flux is that tariff policy functions less as a fixed cost and more as a recurring variable. Nearly half of firms that have already absorbed tariff-related cost increases report plans for additional price increases extending six months or longer, a forward-looking indicator that the adjustment period small businesses are managing through has not concluded (Reason, 2026).

IV. The Reshoring Premise and Its Missing Precondition

A frequently cited rationale for the current tariff regime is the reshoring of domestic manufacturing capacity, and that rationale is not without economic merit: tariffs can, in principle, shift the relative cost calculus toward domestic production. That mechanism depends on a precondition the current policy environment has not supplied: durable, predictable policy over a time horizon long enough to justify the capital commitment involved. A large new manufacturing facility routinely requires between two and six and a half billion dollars in capital investment, depending on the industry, and two to five years before reaching operational capacity (Greenfield Consulting, 2026). No rational capital allocator commits that scale of investment against a policy that can be altered unilaterally, and has in fact been altered repeatedly, by executive action rather than durable legislation.

The absence of a fixed, legislated, long-horizon framework, paired with concrete incentives for domestic construction, converts tariffs from a plausible reshoring lever into a source of the very uncertainty documented throughout this analysis. That uncertainty is not diffuse or without an identifiable source. It originates specifically in how the Trump administration has implemented and repeatedly revised tariff policy since taking office in early 2025, and the reshoring outcome the policy is meant to produce will remain unlikely until that instability is addressed directly.

V. Practical Implications for Small Business Operators

For owners whose supply chains include imported inputs, several operating adjustments follow directly from the data above. First, tariff volatility should be modeled as an ongoing input cost variable rather than a one-time shock to be absorbed and forgotten. Second, a deliberate, pre-decided policy on cost pass-through, how much of a given increase will reach the customer versus be absorbed internally, reduces the risk of reactive, margin-eroding decisions made under time pressure. Third, monitoring trade policy developments specific to a firm’s actual supplier geographies, rather than tariff headlines in general, produces more actionable lead time than broad news consumption. Fourth, maintaining a larger cash buffer than pre-2025 norms would suggest is a reasonable hedge against continued policy unpredictability.

VI. The Bottom Line

Tariff policy in 2026 has not settled into a stable equilibrium, and the available evidence suggests it is unlikely to do so in the near term. For the small business sector, which carries import exposure without meaningful export offset, this is a structural cost pressure rather than an episodic one. Firms that plan explicitly around continued volatility, rather than treating the current environment as a temporary disruption to be outlasted, are better positioned for what the data suggests is still an unfinished adjustment.