By Dilawar Syed and Peter Boumgarden
Consider yourself the proprietor of a modest but rapidly expanding e-commerce company in April 2025. You have historically purchased goods from China, but the president recently declared 145% tariffs on these items. Do you establish operations in Thailand, which will take a lot of labor and fresh investment, or do you hold off until trade is more clear? What if you miss your opportunity to do it because you wait too long?
This isn’t just a hypothetical situation; a genuine business owner who talked to one of us over coffee this past spring is facing this exact conundrum. She’s not alone, either. More than 97% of U.S. enterprises that import goods are small businesses as of 2023. Tariff uncertainty is debilitating for small businesses, in addition to being frustrating.
As an entrepreneur, family business researcher, and former deputy administrator of the U.S. Small Business Administration, we frequently speak with small business owners who are facing similar difficulties. They also tell us that the uncertainty around tariffs is putting a strain on their time, money, and focus.
The evidence supports our anecdotal findings: According to a recent national study, over 70% of small business owners believe that ongoing changes in trade policy have a ripple effect that makes planning challenging.
Small business owners frequently make decisions alone, in contrast to larger firms that have teams of analysts to help them. Every hour spent concentrating on trade policy news or completing extra paperwork represents valuable time away from daily, core activities in an all-hands-on-deck business. This implies that small enterprises are particularly disadvantaged by quick changes in trade policy.
Planning for stability in an uncertain landscape
Both supporters and detractors agree that the Trump administration has adopted a haphazard approach to trade policy, repeatedly announcing and postponing new tariffs. Take its so-called reciprocal tariffs, for example. Trump promised in April to impose a base duty of 10% on imports from almost all countries, with additional hikes for many others. Shortly after, it put a 90-day halt on its plans. That time frame has just finished, and on July 31, the government issued a new executive order outlining various tariff rates for around 70 nations. Change has been the only constant.
In just a few days or weeks, this strategy has shattered long-standing trading connections. Furthermore, small firms are most disrupted by the uncertainty itself, regardless of the results. The greatest problem with tariff measures, according to a new survey of 4,000 small business owners, is the utter uncertainty they create.
This issue is not limited to small business owners. Nearly half of working Americans are employed by these businesses, which are vital to the American economy. This could help to explain why small businesses are so popular among Americans, who see them as beneficial to society and a means of realizing the American dream. If you have doubts, consider the increasing number of recent MBA graduates who are declining offers from large corporations to purchase and manage small enterprises.
However, this agreement does not always result in laws that support the growth of small enterprises. In reality, small businesses are likely to find it more difficult to weather any policy move than larger firms with greater financial resources because they typically operate on smaller margins and have less capacity to absorb disruptions. The latest example is the ongoing tariff saga.
Slow, steady policies help small-business owners
In light of these facts, we advise implementing the final negotiated trade policy modifications gradually. Businesses would still have to deal with supply chain interruptions, but at least they would have time to think about other suppliers or make other preparations. Having that area for planning can have a significant impact on a small business owner’s viewpoint.
In a similar vein, tariffs alone cannot achieve much if policymakers wish to increase manufacturing in the United States. Small manufacturers need to hire people, and there is currently a scarcity of personnel qualified for increasingly high-skilled manufacturing occupations because the unemployment rate is slightly over 4%.
It would be necessary to establish legal immigration channels and make large investments in job training if reshoring were to become a genuine long-term policy goal. Additionally, if the trend toward reshoring is more about automation than labor, it will be essential to help small business owners properly fund their expansion and prepare them for the changes that lie ahead.
Increased government support for training and finance would help small enterprises. The SBA is in a unique position to help small businesses adapt their manufacturing and supply chains. It could provide reasonably priced financing for imports and exports, restructure existing loans that small businesses have had to take out, and provide technical assistance and training on new paperwork and regulations. Regretfully, the SBA has laid off 43 percent of its employees and shut down offices in key cities like Los Angeles, Atlanta, Chicago, Denver, and New Orleans. This is a step in the wrong direction, in our opinion.
Universities may play a significant role in helping small enterprises as well. According to research, training fundamental management skills can enhance important business outcomes including growth and profitability. We advise business and trade schools to put more emphasis on small businesses and the particular difficulties they encounter. Universities have a big chance to promote Main Street entrepreneurs, whether it’s through student consulting projects or executive programs for small business owners.
The U.S. economy is driven by 35 million small enterprises. They are the ones that create jobs in this nation’s cities and villages. They serve as the lifeblood of American societies. We urge academic and governmental leaders to intervene as the country experiences swift and significant legislative changes to guarantee that Main Streets in America not just survive but flourish.
At Washington University in St. Louis, Peter Boumgarden teaches family enterprise. Dilawar Syed is an Associate Professor of Instruction in the University of Texas at Austin’s Department of Business, Government, and Society. The authors express their gratitude to Matt Sonneborn and Gretchen Abraham for their assistance.
