US Business Owners Sound Off on Impact of Potential Trump Tariffs

The potential impact of tariffs on imports during Donald Trump's second presidential term is prompting business owners across various sectors to reassess their operational strategies in a changing economic landscape.

During his campaign, Trump proposed tariffs as high as 60% on Chinese goods and up to 20% on imports from other countries, with the aim of revitalizing U.S. businesses. The economic challenges posed by post-pandemic inflation were a significant factor in Trump's recent election win. However, economists, business owners, and consumers are concerned that the implementation of these tariffs—still unconfirmed—could undermine economic gains and potentially reverse the dramatic reduction in inflation, which dropped from a peak of 9.1% in June 2022.

On September 24, 2024, during a campaign event in Savannah, Georgia, Trump reiterated his promise to "bring thousands of businesses and trillions of dollars in wealth back to the USA." He defended tariffs as a way to generate revenue, claiming that they would not cause inflation, despite past tariff-related price increases. In 2018, Trump's tariffs led to nearly $80 billion in new taxes on Americans by imposing tariffs on a variety of products worth around $380 billion in 2018 and 2019, according to the Tax Foundation. The Biden administration largely maintained these tariffs.

Republican National Committee spokesperson Anna Kelly stated that Trump's tariffs in his first term created jobs, spurred investment, and avoided inflation. She added that a second term would focus on reshoring American jobs, lowering taxes, cutting regulations, and boosting wages through increased domestic energy production.

A report from the U.S. International Trade Commission in March 2023 found that tariffs on Chinese imports led to a 13% reduction in Chinese imports, a 0.4% increase in U.S. production, and a 0.2% rise in domestic product prices.

Mixed Responses in Agriculture

The agricultural sector presents mixed reactions to potential tariffs. Joe Maxwell, a fourth-generation farmer from Missouri, has raised concerns about the broader economic effects of Trump's proposed tariffs, particularly on essential goods like fertilizers. He warned that tariffs would protect monopolies rather than domestic production, given the concentration of market power in industries like fertilizer manufacturing, where companies like CF Industries and Nutrien control over 50% of the market. Maxwell suggested that Trump’s tariffs would likely increase prices for farmers without benefiting domestic production, exacerbating competition issues in an already monopolized market.

Bill Bullard, CEO of R-CALF (Ranchers-Cattlemen Action Legal Fund), views tariffs as a necessary solution to help the domestic sheep industry compete with low-cost imports. Bullard has long called for tariff rate quotas to protect U.S. producers, noting the industry's ongoing trade deficit and the decline in cattle and sheep farming operations.

However, some Republican lawmakers, such as Senators Joni Ernst and Chuck Grassley of Iowa, have criticized tariffs. Grassley emphasized the importance of free trade for farmers who rely on export markets, while Ernst expressed concerns about the impact of increased tariffs on agricultural exports during Trump’s first term. Both criticized the Biden administration for failing to secure new trade agreements, which they argue has limited farmers' export opportunities.

Impact on Small Businesses

In the private sector, small business owners are bracing for the impact of tariffs. Alice Vaughn, CEO of MilkToast Brands in Las Vegas, warned that new tariffs could lead to layoffs and higher costs, forcing her to reduce her workforce and scale back operations. Vaughn pointed out that many U.S.-based manufacturers still rely on global supply chains, and that tariffs would affect costs across the board, including for raw materials and manufacturing equipment.

Entrepreneur Brian Williams, who runs several businesses, including a fitness subscription service, noted that the potential for tariffs has led him to explore alternative manufacturing locations outside China, such as Mexico and Turkey. However, he acknowledged the uncertainty about how tariffs would evolve under a second Trump term.

Travis Peterson, who owns a small novelty card business, shared similar concerns. He emphasized that if tariffs were implemented, his margins would shrink unless he could raise prices, which could hurt demand. Peterson also noted the high costs of automation, which would be necessary to shift production to the U.S., but he remains uncertain about how significantly tariffs would affect his business in the long run.

The Small Business Administration has not commented on potential policies under a future Trump administration, but the concerns of small business owners are clear: tariffs could lead to higher costs, reduced demand, and economic strain for many enterprises, particularly those relying on international supply chains.