Small Businesses Feel the Squeeze as Tariffs Threaten Survival

In 2017, Christina and Ian Lacey took a leap of faith, leaving behind stable jobs to turn their passion for music and creativity into a full-time venture. From their Denver home, they launched Retuned Jewelry, a business that transforms donated guitar and bass strings into handcrafted accessories. Their dedication paid off, with sales averaging $360,000 annually, much of which came from selling at music and art festivals across the country.

However, their thriving small business now faces a serious threat due to steep U.S. tariffs on Chinese imports, recently raised to 145% under former President Donald Trump. While their string supply is donated, essential components like chains, clasps, and beads come from China—where most of these materials are manufactured. The Laceys say they’ve tried to source alternatives within the U.S., but have found no domestic suppliers that produce what they need, forcing them to raise prices even before the full tariff impact hits.

John Arensmeyer, CEO of the advocacy group Small Business Majority, explains that companies like Retuned Jewelry are particularly vulnerable. Lacking the resources of larger corporations, small businesses often have thinner profit margins, limited leverage with suppliers, and few cash reserves to absorb price shocks. As a result, many are left with stark choices: raise prices, cut staff, halt growth, or close altogether. Arensmeyer called the tariffs “a crisis” for small businesses, stressing that they lack the control or capacity to pivot quickly.

The Laceys are not alone. The Mitchell Group, a family-run textile company in Illinois, is also grappling with the consequences of tariffs. COO Ann Brunett explained that high import taxes on Chinese materials—often paid upfront—tie up vital cash, especially for inventory that sits in warehouses waiting for distribution. Despite generating nearly $10 million annually and employing 30 people, the company is under immense financial pressure. President Bill Fisch has looked to other countries like Vietnam and India but says no one matches China’s scale and efficiency in textile production.

Experts argue that while the goal of tariffs is to boost domestic manufacturing, it’s not a short-term solution. The U.S. has seen a long-term decline in its textile and apparel industry, and rebuilding the necessary infrastructure will take years. Sheng Lu, a professor at the University of Delaware, points out that key raw materials used by companies like the Mitchell Group are nearly impossible to find domestically. Until that changes, small businesses reliant on global supply chains are left to bear the brunt of policy decisions far beyond their control.