Small businesses plead for relief from crushing costs of Trump’s tariff war — here’s how they’re trying to weather storm
Prestident Trump’s tariffs are socking US businesses across the board — but it’s the smaller companies that are really taking it on the chin.
Small and midsize firms account for $868 billion, or about a third, of yearly US imports, according to the Census Bureau.
While these companies are tiny compared to the likes of Microsoft, Amazon or Lululemon, they still rely on Chinese manufacturing — and they’re far less equipped to handle punishing financial disruptions like this.
Nearly one in five small-to-midsize firms are pessimistic about their chances of survival over the next five years, according to a new report from PYMNTS Intelligence report.
Just under 7% of all firms surveyed — and 13% of those without access to financing — believed they were unlikely to survive the next two years.
The heads of some of these small businesses spoke to The Post about their fears:
Little Tikes
Isaac Larian, chief executive MGA Entertainment, voted for President Trump in November — but lately, he’s not so sure he made the right decision.
“Frankly, I’m getting angry,” said the toymaker of Bratz dolls, L.O.L. Surprise and other wildly popular items.
In just two weeks, the Los Angeles-based company has paid nearly $10 million in tariffs to import its merchandise to the US from China.
That has crimped plans for MGA’s Little Tikes line of toddler toys — among the few US toy makers that owns a factory here — to expand a factory in Hudson, Ohio that currently employs 700 workers.
Instead, MGA could be laying off some of those workers, Larian told The Post.
“We were going to break ground later this year, but we have to put it on hold,” Larian said.
Meanwhile, Bratz dolls that cost $15 right now will likely cost as much as $30 in time for Christmas. At that rate, the company will lose up to 40% of its sales and 40% of its profit this year, Larian said.
The toy industry has been lobbying for an exemption to the 145% tariff on goods made in China and sees the carve out for tech companies over the weekend as unfair, he added.
“Big companies like Apple have the money and clout to get Mr. Trump’s ear,” Larian said.
His message to President Trump?
“You are a great man and you love the USA. I am a big supporter of you,” Larian began.
“We have invested tens of millions of dollars to expand and plan to do the same and make more toys in the USA.
“We have now put that on hold because of tariffs, as our sales are declining big time because of them. Please come and visit” the company’s factory in Ohio. “It will be a great honor,” he continued before uttering a final plea.
“Please exempt toys from tariffs. We only have 255 days left till Christmas.”
Wonderstate Coffee
Before the tariff wars, Wonderstate Coffee was on track to grow 15% this year. The java distributor was also getting ready to invest $300,000 in new packaging equipment and open its fourth cafe, in Madison, Wis.
Now, the company, which supplies supermarkets and restaurants across the Midwest, is talking to bankers to expand a line of credit so it can pay an extra $20,000 in tariffs on a shipment of choice beans coming from Ethiopia.
“We have a fear that we’ll be in a cash crunch,” Wonderstate TJ Semanchin told The Post. “You start to question whether it’s the time to invest in growth.”
While Semanchin is not planning to lay off employees, he said he may have to slash an employee profit-sharing program.
The 90-day pause on reciprocal tariffs last week didn’t spare the importer, which is still stuck paying an extra 10% for everything it brings in from coffee producers overseas.
“A 10% increase on all of our costs is still a massive disturbance for us,” Semanchin said. “These swings of tens of thousands of dollars from day to day are making us less hopeful. It’s sinking in on how it will hit our actual costs.”
On top of the $20,000 in tariffs, Wonderstate will have to pay approximately $4,000 in interest to borrow the money for the duties, Semanchin said.
Tarptent
Tarptent Inc. — a Nevada City, Calif.-based company that makes lightweight tents and other outdoor and camping gear — relies on three manufacturing facilities. One is in Hong Kong, another is in Vietnam and a third is in Seattle.
“As of today, because of tariff rates, we have had to suspend all operations” at the Hong Kong factory, Tarptent President Henry Shires told The Post. “I don’t know where we’re going next.”
With the recent increase in the tariff rate to 37.5% from 7.5%, Shires said that the company recently had to pay more than $51,000 in levies — up from around $10,000 that he would have paid previously.
The company generates around $2.5 million per year, he added. If there is no change on the tariff front, that number will drop to under $1 million, Shires said.
Shires told The Post that the company currently has enough inventory to sell through the summer, but “we won’t have enough stock to stay open” going into the fall if the tariffs remain in place.
At that point, Tarptent will “either shut down or severely redefine what it is we support in the industry,” Shires said.
Vikre Distilling
Vikre Distilling is waiting to hear back from vendors that supply it with everything from corks, labels and bottles.
The Duluth, Minn., distiller has been making vodka, gin and whiskey for the past decade and struggled to raise prices during the height of inflation over the past couple of years.
“We saw a huge drop in sales,” said owner Emily Vikre, noting that bar, restaurant and retail customers alike have drastically cut back on orders.
“Since the start of this year, we have seen a pullback because consumers are being more conservative about their spending,” Vikre told The Post. “But now our retail customers have stopped ordering. They are worried about being stuck with a bunch of inventory.”
Vikre is bracing for vendors to hike prices again because of the tariffs. Her label maker, for example, relies on imports from China to make their labels adhere to the glass bottles.
If the price hikes are unmanageable, Vikre is considering returning some of her warehouse and retail space to her landlord.
Out There Outfitters
Sarah McDonald, co-owner of apparel store Out There Outfitters in Wayne, Pa., told The Post that she’s concerned she may need to lay off some of the 15 people she employs.
“Honestly when the tariffs were announced I felt like basically every small business in America was told they will probably have to go out of business,” McDonald said.
She added that the tariffs will likely mean higher prices, which will be passed on to the consumer.
Adding to the uncertainty is whether the tariffs will be implemented, at what rate and when, she said.
“It was so extreme how high the tariffs were,” McDonald said, adding: “Things have changed, numbers are changing, dates are changing.”
Kamhi World
“I understand the rationale behind the tariffs. There’s been an imbalance,” said Jay Kamhi, founder of Clearwater, Fla.-based Kamhi World, which sells the Mr. Predictor fortune-telling toy.
The Amazon seller, which exclusively imports all of its custom toys from a facility in China, has temporarily halted all overseas manufacturing. That’s because the tariffs could send the cost of his fall and holiday deliveries, currently pegged at about $1 million, to as much as $1.5 million.
“If we have to pay $1.5 million in penalties, or tariffs . . . we make no profit. We lose money. It’s not sustainable by any stretch of the imagination, and we’ve got nowhere to go,” Kamhi told The Post.
The company is looking into a production shift to Vietnam or Mexico, but “you got these big, expensive molds that are sitting in China, and you’ve got to find a way to transport them. You’ve got to find a factory that will do it. A lot of factories, for Vietnam, for example, we’re told, ‘We don’t have space for you. Every person is trying to come to our factory right now. We don’t have room for you.’ ”
Kamhi said he’s looked into US manufacturing in the past and would love to do it — but the specialized molds and electronics that go into his toys are only available overseas. Even if there was capacity at US facilities, it would cost about 10 times more, he said.
Layoffs are not an option for Kamhi. The head of marketing at Kamhi World is engaged to Kamhi’s daughter; his operations employee is married to his other daughter. The company’s executive director — whose father is good friends with Kamhi — has been with Kamhi World for 15 years.
“Each one of these people – their families depend on this company doing well,” Kamhi told The Post. “Literally overnight all these people now are terrified that they’re not gonna have money to support their families. My daughter called me up two weeks ago crying, going, ‘Dad, how are we going to get through this?’ ”
