The White House just wrapped up a victory lap for National Small Business Week, complete with talk of “unleashing opportunity” and “pro-growth” tariffs. But here’s the thing: If you’ve actually run a business in the last five years, not just written a speech about one, you know that’s not how any of this works.
Let’s skip the spin. Tariffs don’t protect small businesses. They punish them. Quietly, consistently, and with compounding effect.
Tariffs aren’t some clever tool for leveling the playing field. They’re a quiet tax that makes everything harder, especially for small businesses already navigating a minefield of rising costs, broken supply chains, and labor pressure. While political leaders paint a picture of Main Street revival, the view from the storefront is very different. Prices are up. Supply chains are unpredictable. Margins are shrinking. And now, the federal government wants a round of applause for slapping another tax on the people least equipped to absorb it.
A National Bureau of Economic Research (NBER) study found that the added cost from tariffs is passed entirely onto U.S. importers. That means the burden doesn’t fall on foreign competitors, it falls on American businesses, especially smaller ones with thinner margins and less leverage. Most small firms don’t have backup suppliers, global negotiating power, or the financial runway to absorb these shocks.
Tariffs aren’t strategic. They’re structural sabotage
The logic behind tariffs is always the same: Punish unfair foreign trade practices, protect domestic industry, and stimulate local growth. The administration’s argument is that tariffs will “bring jobs home” and reduce foreign dependence. In theory, maybe. In practice, what they really do is sow chaos in supply chains, delay production and force business owners to make impossible choices. Raise prices and risk losing customers? Or eat the costs and hope to survive another quarter?
That’s not an opportunity. That’s a trap.
And ironically, it helps the very corporations these policies claim to check. Amazon can swallow cost increases. Walmart can reroute freight. But the family-owned coffee roastery that needs imported equipment to stay competitive? They're left holding the bag.
Tariffs aren’t about establishing fairness. They create barriers, especially for small businesses trying to get off the ground.
For early-stage companies, tariffs affect more than the bottom line
In any situation where VCs feel there is systemic risk to the economy, it is harder to get them to open up their checkbooks. Startups need many rounds of capital, and if there is a perception that future rounds will be hard to come by, they will need more conviction to make investment.