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Peter Boumgarden[/caption]
Imagine it’s April 2025 and you’re the owner of a small but fast-growing e-commerce business. Historically, you’ve sourced products from China, but the president just announced tariffs of 145% on these goods. Do you set up operations in Thailand – requiring new investment and a lot of work – or wait until there’s more clarity on trade? What if waiting too long means you miss your chance to pull it off?
This isn’t a hypothetical – it’s a real dilemma faced by a real business owner who spoke with one of us over coffee this past spring. And she’s not alone. As of 2023, of those U.S. companies that import goods, more than 97% of them were small businesses. For these companies, tariff uncertainty isn’t just frustrating – it’s paralyzing.
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Dilawar Syed[/caption]
As a family business researcher and former deputy administrator of the U.S. Small Business Administration and entrepreneur, we hear from a lot of small-business owners grappling with these challenges. And what they tell us is that tariff uncertainty is stressing their time, resources and attention.
The data backs up our anecdotal experience: More than 70% of small-business owners say constant shifts in trade policy create a “whiplash effect” that makes it difficult to plan, a recent national survey showed.
Unlike larger organizations with teams of analysts to inform their decision-making, small-business owners are often on their own. That means rapid trade policy shifts leave small businesses especially at a disadvantage.
The Trump administration has taken an unpredictable approach to trade policy.
Back in April, Trump pledged a baseline 10% tariff on imports from nearly everywhere, with extra hikes on many countries. Not long afterward, it hit pause on its plans for 90 days. That period just ended, and the administration followed up with a new executive order on July 31, naming different tariff rates for about 70 countries. The one constant has been change.
This approach has upended long-standing trade relationships in a matter of days or weeks. And regardless of the outcomes, the uncertainty itself is especially disruptive to small businesses. One recent survey of 4,000 small-business owners found that the biggest challenge of tariff policies is the sheer uncertainty they cause.
This isn’t just a problem for small-business owners themselves. These companies employ nearly half of working Americans and play an essential role in the U.S. economy.
Because small businesses often operate on thinner margins and have less capacity to absorb disruptions, any policy shift is likely to be more difficult for them to weather than it would be for a larger firm with deeper pockets. The ongoing tariff saga is just the most recent example.
Given these realities, final negotiated changes to trade policy should have been rolled out slowly. Although that wouldn’t prevent businesses from facing supply chain disruptions, it would at least give them time to consider alternate suppliers or prepare in other ways.
Similarly, if policymakers want to bring more manufacturing back to the U.S., tariffs alone can accomplish only so much. Small manufacturers need to hire people, and with unemployment at just over 4%, there’s already a shortage of workers qualified for high-skilled manufacturing roles.
Making reshoring a true long-term policy objective would require creating pathways for legal immigration and investing significantly in job training. And if the path toward reshoring is more about automation than labor, then preparing small-business owners for the changes ahead and helping them fund growth strategically will be crucial.
Small businesses would benefit from more government-backed funding and training. The Small Business Administration is uniquely positioned to support small firms as they adjust their supply chains and manufacturing – it could offer affordable financing for imports and exports, restructure existing loans that small businesses have had to take on, and offer technical support and education on new regulations and paperwork. Unfortunately, the SBA has slashed 43% of its workforce and closed offices in major cities including Atlanta, Chicago, Denver, New Orleans and Los Angeles.
Universities also have an important role to play in supporting small businesses. Research shows that teaching core management skills can improve key business outcomes, such as profitability and growth. We recommend that business and trade schools increase their focus on small firms and the unique challenges they face. Whether through executive programs for small-business owners or student consulting projects, universities have a big opportunity to lean into supporting Main Street entrepreneurs.
Thirty-five million small businesses are the engine of the U.S. economy. They are the job creators in cities and towns across this country. As the nation undergoes rapid and profound policy shifts, we encourage leaders in government and academia to take action to ensure that Main Streets across America not only endure but thrive.
Peter Boumgarden is a professor of family enterprise at Washington University in St. Louis. Dilawar Syed is an associate professor of instruction at the University of Texas Austin. Distributed by The Conversation and The Associated Press.
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