Economic Adjustments: Job Cuts and Price Hikes as Trump's Tariffs Take Effect in Companies.
Small Businesses Struggle Amidst Tariff Uncertainty
President Trump's tariff policy is causing significant challenges for small businesses and manufacturers, particularly in the outdoor apparel industry.
Barry Barr, the owner of KAVU True Outdoor Wear, is one such business owner feeling the impact. Despite tariffs on China, India, and Vietnam, Barr has continued manufacturing goods at these factories. However, the increased tariffs have forced him to take cost-saving measures, such as freezing marketing spending and prohibiting employees from traveling to see customers.
Barr has also had to increase retail prices for his summer 2026 line by about 15% to 30% due to tariffs settling around 20% for Vietnam and 50% for India. This price increase, combined with the threat of further tariffs, has resulted in a 15% drop in KAVU's preseason sales compared to the summer season. Barr is worried he will have to raise prices even more due to the tariff rates settling higher than initially anticipated.
The U.S.'s trade deal with Vietnam stipulates a 20% tariff on goods from the country, and India is facing 50% tariffs. Trump has also signed an executive order that doubles tariffs on India to 50%, and threatened to impose a 100% tariff on foreign semiconductors.
These increased tariffs are causing economic insecurity for small businesses, with many reporting their highest level of economic insecurity since 2009. Employment at the smallest firms (under ten employees) has dropped by 3%, equating to about 366,000 jobs lost since Trump's tariff implementation began.
The evolving and unpredictable nature of tariff rates adds to the complexity, making it difficult for small business owners to plan their sourcing, pricing, and growth strategies. This "whiplash effect" from constantly shifting trade policies creates significant operational strain and strategic paralysis.
In a virtual news conference with Sen. Patty Murray, D-Wash., Barr expressed his concern that the tariffs will severely hurt KAVU but hopes his company can pull through with the right adjustments. Barr is considering laying off some of his 28 employees due to the shrinking profit margin.
Many companies are concluding that they can no longer afford to hold back due to Trump's tariff policy. Officials at the Federal Reserve are closely watching inflation and the labor market for signs that the tariffs are affecting the broader economy. Small businesses are advised to mitigate these effects by diversifying supply chains to tariff-exempt countries, improving operational efficiencies, and communicating transparently with customers, though the ongoing uncertainty remains a major challenge.
[1] The New York Times [2] The Washington Post [3] Bloomberg [4] KAVU True Outdoor Wear [5] National Small Business Association
- Small businesses in the sports industry, like KAVU True Outdoor Wear, are struggling under President Trump's tariff policy, as the increased tariffs have led to cost-saving measures and prices hikes, causing a drop in preseason sales.
- The business sector, such as the outdoor apparel industry, is experiencing economic insecurity due to tariffs, with many companies, including KAVU, needing to reconsider their strategies, like diversifying supply chains or considering layoffs, to cope with the ongoing uncertainty.
