Small businesses may raise prices to cover tariffs

“Everything is really expensive,” says home decor -based California -based business owner Oakland Melanie Abrantes.

Abrantes is one of the CEOs of small and medium -sized consumer product businesses who say that President Donald Trump in the United States can force the prices to increase prices before the end of the year.

Last week, Trump updated tariff rates for dozens of countries ranging from 10% to 41%, which came into force as of August 7. In order to prevent applicable tasks through a country that is thought to have been transferred or at a time, it will be sent to disguise from where they were made at the beginning, and the annex will be hit by 40%.

Earlier this year, they say that US enterprises stocked at the inventory are now exhausted. When they are re -ranked from overseas producers, they will need to pay upright import costs.

Wells Fargo economists wrote in July, “the inventory has reduced the need to increase the prices of pre -avoidance, but it will be increasingly difficult for businesses to absorb higher import tasks as pre -buyer stocks decrease.” research report. He continued: “As a result, we expect basic goods prices to increase in the second half of the year.”

Matt Hassett (Economist Kevin Hassett has no relationship with) He runs New York -based start Loftie. In April, when Trump first details the tariff plan, there were five months of smart player watches from smart player times.

In September, Hassett says Loftie would have to import a new party from the China manufacturer. He said the current 30% tariff rate, the popular $ 170 smart watch will increase the price to $ 185 with an increase of 9%.

“A lot of people think this [tariff] The situation is not so bad right now, because we all had inventory in the hands of business owners, “says Hassett.” [consumer goods] Prices. I think it was a wrong sense of convenience. “

US consumers, since 1934, the highest average effective tariff rate will live 18.3%, Yale University Budget Laboratory. Non -Partisan Research Center, tariffs are expected to cost US households to cost an average of $ 2,400 in 2025.

Abrantes, which makes and sells items such as bowls, cultivates and vases made of wood or mushrooms, imports some products and materials from Portugal. He said that he already increased his prices up to $ 50 in some products and expects that he may need to raise them again before the end of the year. The product series to reduce costs – selling less or less expensive products – considering to simplify.

“I have a premium product for a group of niches,” Abrantes says. “At the end of the day, consumers will not swing.”

Even small price increases in an uncertain economy can push low and medium -income consumers towards optional purchases or cheaper products, 2024 Boston Consulting Group Found.

Small businesses tend to work with fine profit margins. If consumers are withdrawn, the fields of these companies may be closed, says the National Small Business Association Defending Group President and CEO Todd McCracken.

“Retailers have been able to hold the pricing line so far, but new tariffs will affect the goods in the coming weeks,” the National Retail Federation Vice President David French said to CNBC on 1 August.

“The direct result of tariffs will be higher prices, reduced recruitment, less capital expenditure and slower innovation,” he said.

The effects of fluctuation may be important: almost half of the working Americans are employed by small enterprises representing 43.5% of America’s gross domestic product (GDP). According to the US Chamber of Commerce.

For months, businesses are trying to find a solution to the tariff charges that have been approaching. Trump has repeatedly suggested a simple one: Move your production to the US, but business owners and manufacturers say it’s not that easy.

Compared to his colleagues abroad, American factories cannot yet offer competitive prices and widespread production expertise. Creating this ability may take at least three to five years or longer in the CNBC’s April Supply Chain Survey.

Kim Vaccarella is the CEO of Secaucus, a new Jersey -based beach tote manufacturer. He says that his company produces his products abroad because the internal options do not provide the same quality.

Vaccarella said he plans to put his next inventory order from factories in China and Vietnam at the end of the year. Then it can increase prices, depending on the tariff rates at that time.

“We are trying to save our best in 2025,” Vaccarella says. “We don’t want to raise prices [but] Then understand that it is not enough to cover even some of the tariffs. “

McCracken says some small businesses enter the debt to survive. Hassett has already borrowed money and used his personal savings to cover the payrolls for Loftie’s nine employees in June.

Other CEOs use more creative funding methods, albeit temporarily. CEO Beth Benike, an attempt to sell baby mats and teething toys, the busy baby, last spring inventory re -stock with a tariff bill of $ 35,000. Thus, he launched a Gofundme Crowdfunding campaign. He collected $ 38,000To meet costs.

Businesses cannot rely on strategies such as long -term mass funding. If the existing tariff rates continue, the busy baby will add an additional 10% tariff fee to each payment car on the website on the next inventory stock.

“I, ‘What is the American dream?’ Because I thought I was alive, Ben Benike says. “I served my country, I got a training, I bought a house, I founded a business. … This is no longer a dream.”

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