Small retailers react to threat of new tariffs

President-elect Donald Trump is outlining his policy agenda as he prepares to take office next year. Trump and his new administration have the opportunity to positively impact retailers, our employees and the customers we serve by pursuing pro-growth policies to stimulate the economy and reduce overall costs.

Despite this optimism, Trump’s current trade strategy — centered on increasing tariffs on U.S. imports — has the potential to upend progress toward an improved economy by raising costs for everyday goods.

The proposed tariffs include a universal 10%-20% tariff on imports from all foreign countries, along with an additional 60%-100% tariff on imports specifically from China. These measures could potentially reduce consumer spending by up to $78 billion annually on key consumer goods categories and significantly strain retailers’ business operations.

Small retailers are concerned about the proposed tariff hikes. Here are just a few ways these tariffs would impact businesses and customers.

Increased prices

Many small retailers say they will have to raise prices on consumers if new tariffs are enacted. Unable to absorb the cost of increased tariffs, they would be forced to pass the cost along to their customers in the form of higher prices.

“An additional 60%-100% tariff on imports from China would be devastating to our operations,” says Angela Hawkins, owner of Atlanta-based bedding company Bamblu. “This tariff would force us to either drastically increase prices or compromise on product quality, both of which would violate our brand’s promise to deliver high-quality, sustainable sleep solutions at an accessible price.”

Beth Aberg of Random Harvest Home, a furniture and accessories store in Virginia, shares the concern of higher prices. “Our margins require that we pass along all increases directly to our consumers in price increases,” Aberg says.

Inability to procure products

While some small retailers support the incoming administration’s goal of increasing American manufacturing, the complexities of the global supply chain make this challenging.

Lisa Jae Eggert, founder of New York-based organic insect repellent company 3 Mom’s Organics, strives to buy American-made components for her products. However, the U.S. companies she purchases from often source their parts from China.

“Our bottles and tops are bought in the U.S. from U.S. companies,” she says, “but these companies are procuring these bottles and tops from China.”

Similarly, Rozalynn Goodwin, owner of haircare accessories company Confidence, wants to prioritize shifting her production to the United States but finds it financially unfeasible. “I’ve tried many times to manufacture my bows in the United States. It’s simply too expensive,” she says.

Fears of closure

If these proposed tariffs are enacted, small retailers are concerned the increased costs will be more they can bear. That could force them to close their businesses.

Jennifer Luna, owner of The Kindship, a network of small gift shops in Tacoma, Wash., fears the sudden increase of tariffs will hurt small, independent businesses the most. “We don’t have the margins to absorb these costs,” Luna says. “Sales will slow significantly, and many more small businesses will shutter.”

Hawkins echoes this concern. “Such a dramatic increase in costs could potentially lead to the closure of Bamblu if we can no longer source our goods at a reasonable cost,” she says.

Instead of imposing tariffs, NRF urges the incoming administration to adopt a China trade strategy that is strategic in nature, addresses the ongoing challenges using a mix of tools and safeguards American consumers and businesses.

NRF is prepared to collaborate closely to develop solutions that hold China and our trade partners accountable for unfair trade practices. We must make sure the strategies are not broad-based while ensuring protection against cost increases to everyday essential products for consumers and retailers.