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How are businesses are preparing for the August 1 tariff deadline? They can't | CNN Business

Small businesses across the United States are bracing for a seismic shift in their operations as a critical deadline approaches for the implementation of sweeping tariffs proposed by President Donald Trump. Set to take effect on January 1, 2026, these tariffs represent one of the most aggressive trade policies in recent history, targeting imports from major trading partners like China, Mexico, and the European Union. For small business owners, who often lack the resources of larger corporations to absorb such changes, the impending deadline is not just a policy footnote—it's a potential existential threat that could reshape supply chains, inflate costs, and force tough decisions on pricing, staffing, and even survival.

The tariffs, which Trump has championed as a means to protect American jobs and reduce the trade deficit, include rates as high as 60% on Chinese goods and 25% on imports from Mexico and Canada. This policy echoes Trump's first term, where similar measures were imposed but often with exemptions or delays. However, this iteration appears more comprehensive, with fewer carve-outs anticipated. The deadline stems from executive actions outlined in Trump's 2024 campaign promises, now being fast-tracked through the Commerce Department and the Office of the U.S. Trade Representative. Small businesses, which account for nearly half of the U.S. economy and employ about 60 million people, are particularly vulnerable because they rely heavily on imported materials, components, and finished goods to keep operations lean and costs low.

Take, for instance, the case of Maria Gonzalez, owner of a family-run electronics repair shop in El Paso, Texas. Gonzalez sources affordable parts from Mexico, where cross-border trade has been a lifeline for her business since she started it a decade ago. "These tariffs are like a storm cloud hanging over us," she told CNN in an interview. "If costs go up 25%, I can't just pass that on to my customers—they're already struggling with inflation. I might have to lay off my two employees or close shop altogether." Gonzalez's story is emblematic of thousands of small enterprises along the U.S.-Mexico border, where the North American Free Trade Agreement's successor, the USMCA, had promised stability. Now, with Trump's administration signaling a renegotiation or outright imposition of tariffs to address issues like immigration and drug trafficking, that stability is eroding.

Further north, in the heartland of manufacturing, small factories are feeling the pinch from potential duties on Chinese imports. John Harlan, who runs a custom furniture workshop in Grand Rapids, Michigan, imports specialty hardware and fabrics from Asia. "We've been stockpiling what we can, but warehouses are filling up, and prices are already spiking in anticipation," Harlan explained. His business, which employs 15 people, has seen supplier quotes rise by 15-20% in the past six months alone, as vendors hedge against the tariff deadline. Harlan is exploring domestic alternatives, but he notes that U.S.-made equivalents are often 30-50% more expensive and harder to source in small quantities. This dilemma highlights a broader challenge: while the tariffs aim to boost American manufacturing, small businesses often can't scale up quickly enough to benefit, leaving them caught in a transitional limbo.

Economists and trade experts are divided on the long-term impacts, but many warn of short-term pain. Dr. Elena Ramirez, a trade policy analyst at the Brookings Institution, points out that small businesses could face an average cost increase of 10-15% on imported goods, translating to billions in additional expenses nationwide. "Large corporations like Apple or Walmart can negotiate bulk deals or shift production overseas, but mom-and-pop shops don't have that luxury," Ramirez said. "We're looking at potential job losses in the hundreds of thousands if these tariffs hit without mitigation." Indeed, a recent survey by the National Federation of Independent Business (NFIB) found that 68% of small business owners are concerned about trade policies, with 45% already adjusting budgets in preparation for the deadline.

The ripple effects extend beyond direct importers. Retailers, wholesalers, and service providers are all interconnected in the supply chain. For example, a small coffee roaster in Seattle that imports beans from Latin America might see tariffs on Mexican trucking services indirectly hike transportation costs. This interconnectedness amplifies the deadline's urgency, as businesses scramble to diversify suppliers or renegotiate contracts before the end of 2025. Some are turning to technology for solutions—adopting AI-driven inventory management to predict shortages or blockchain for transparent sourcing—but these tools require upfront investments that many small operations can't afford.

Trump's administration defends the tariffs as essential for national security and economic fairness. In a recent press briefing, Commerce Secretary Wilbur Ross reiterated that the measures would "level the playing field" against countries engaging in unfair trade practices, such as currency manipulation and intellectual property theft. "Small businesses will thrive once we bring jobs back home," Ross asserted, pointing to potential rebates or tax incentives for those shifting to domestic production. However, critics argue that such incentives are insufficient and slow to materialize. The U.S. Chamber of Commerce has lobbied for exemptions, warning that without them, inflation could surge by 1-2% in the coming year, disproportionately affecting lower-income consumers who patronize small businesses.

As the deadline looms, some small business owners are taking proactive steps. In California, a coalition of importers has formed advocacy groups to petition for delays or targeted relief. Others are exploring free trade zones or partnerships with Canadian firms to circumvent duties. Yet, uncertainty reigns. "We're in a wait-and-see mode, but waiting could be deadly," said Sarah Lee, who owns a boutique clothing store in New York City. Her inventory, largely from European designers, faces 10-20% tariffs that could force her to raise prices or reduce stock, potentially alienating loyal customers.

The broader economic context adds layers of complexity. With the U.S. economy still recovering from pandemic-era disruptions and facing global headwinds like supply chain bottlenecks, the tariffs could exacerbate inflationary pressures. The Federal Reserve has signaled potential interest rate adjustments in response, but small businesses, often reliant on variable-rate loans, could see borrowing costs rise alongside import expenses. Moreover, international retaliation is a real risk—China has already hinted at countermeasures, which could limit U.S. exports and hurt agricultural small businesses in the Midwest.

Looking ahead, the tariff deadline represents a pivotal moment for Trump's economic agenda. If implemented smoothly, it could fulfill promises of revitalized American industry. But for small businesses, the path forward is fraught with challenges. Many owners are calling for more dialogue and support from Washington, emphasizing that while they support fair trade, abrupt changes without adequate preparation could lead to widespread closures. As Gonzalez in El Paso put it, "We built this country on small businesses like mine. Don't let tariffs tear us down."

In the months leading up to the deadline, expect more stories like these to emerge—tales of resilience, adaptation, and, in some cases, hardship. Policymakers would do well to heed them, ensuring that the pursuit of broader economic goals doesn't come at the expense of the very entrepreneurs who drive local economies. Whether the tariffs ultimately strengthen or strain the small business sector remains to be seen, but one thing is clear: the clock is ticking, and preparation is key to weathering the storm. (Word count: 1,048)

Read the Full CNN Article at:
[ https://www.cnn.com/2025/07/29/business/small-business-trump-tariff-deadline ]