Small businesses, the largest job creators in the US, are facing the adverse impacts of President Donald Trump’s sweeping tariffs plan and immigration policies.
Immigrants founded almost 24% of new businesses in 2024, according to data from the Small Business Administration. Almost 97% of US businesses are small businesses, which produce 43% of the nation’s GDP.
“More than 97% of all importers in the United States are small businesses. Two-thirds of small businesses export. So tariffs is a small business problem,” said Dilawar Syed, former deputy administrator at the Small Business Administration during the Biden administration.
“We often talk about big companies, and these tactics have been used to negotiate in terms of big companies. But the impact on small businesses does not get enough attention, even though the numbers suggest that’s where the biggest impact is,” said Syed, speaking at an American Community Media news briefing Aug. 15.
The price of basics like avocados, tomatoes, beef, and cloth used by garment factories are all going up. Small entrepreneurs are struggling to keep up with costs they cannot pass on to consumers, said Syed, who is also an entrepreneur.
Layoffs
He recalled a Latina small business owner who runs an ethnic food store. “She told me that she got a bill from Customs and Border Patrol, CDP for $19,500 of import duty.” The entrepreneur told Syed she did not have $19,500 to pay in import duties, nor could she pass the costs on to the supermarkets she supplies, as they need at least 3 months to adjust pricing.
“So what’s the consequence? She will have to lay off workers or she will have to shut down,” said Syed. He noted that several SBA offices — which might have been able to help in such situations — have been shut down over the past 7 months.
A survey released by the National Small Business Association in May noted that nearly two-thirds of small businesses picked economic insecurity the top challenge facing their business, the lowest level of confidence in over 13 years.
Businesses Failing
“This is the president who ran on economy. This is the president who claims to be a successful business person. And 58% of small business owners who are the engine of economy are telling us — just barely six months into his administration — that they are worse off economically. So these tariffs are hugely injurious, not only to small business owners, but also to job creation prospects,” said Syed.
“These policies are not designed to get us more competitive globally. They’re not designed to get us better access. They’re being used as political tools,” said Syed. “The impacts, whether you import from China or another country, are significant: you cannot plan, because you don’t know what your costs will be.”
“I’m really concerned that we’re going to see a large number of businesses facing closures,” he stated.
An Entrepreneur’s Story
Entrepreneur Marcus Bowers, co-founder of She’s Happy Hair based in Houston, Texas, shared his concerns about the impacts of tariffs to his chain of salons.
Bowers sources the hair for his weaves, extensions, and wigs from around the world. Much of his supply comes from India. Bowers competes to get barrels of hair at India’s temples where it is shorn for rituals. The hair is then processed at factories in China.
“As I traveled around the world and started comparing and contrasting suppliers and supply chains and the factories, I saw nothing in comparison to what China has to offer as far as everybody else around the world,” said Bowers, explaining that workers and factories in China are streamlined for incredibly scaled-up production.
Automation
He expressed his doubts about Trump’s aim to return manufacturing back to the US. “When I think about my industry, I don’t see Americans wanting to sit in some of these factories, wefting hair for 10 hours to 12 hours a day. When it comes to the processing, I don’t think Americans are going to be doing the deep cleaning, the sterilization, the sorting, the coloring, the bleaching.”
The Navy veteran said it will take the US several years to develop the scale of operations to successfully compete with Chinese manufacturers. Moreover, he said, new American factories will rely on automation, doing little to benefit the country’s labor market.
The Navy veteran has had to raise his prices as tariffs hit. Bundles of hair have gone from $75 to $110, and hair extensions have risen from $1100 to $1500. Bowers is seeing less foot traffic at his salons and customers are choosing to wait longer between cycles of replacing their extensions.
But Bowers remains determined to weather it out, without layoffs. He plans to throw in more sales cycles, with spontaneous and flash sales. “Once a customer has spent a dollar with you, they should be able to spend with you again and again,” he said, adding it is his job to be able to meet his customers’ price point.
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