Small Business Navigates Trump’s Tariff and Trade Policy Shifts
President Trump has followed through on campaign promises by imposing and threatening tariffs on trading partners such as China, Mexico, Canada, and Europe. These efforts aim to boost American manufacturing but have left corporate leaders and small business owners uncertain about what to expect in the year ahead. Frequent changes—imposing, adjusting, and rescinding tariffs—make it challenging to predict the administration’s trade direction.
Despite the volatility, optimism remains high among business leaders. A recent Conference Board measure of CEO confidence rose in the first quarter of 2025. Similarly, many small business owners have expressed renewed hope and optimism for the year ahead. However, consumer sentiment tells a mixed story. According to the University of Michigan’s Consumer Sentiment Index, expectations for personal finances and the short-term economic outlook dropped by nearly 10% in February. Meanwhile, the long-term outlook fell 6%, hitting its lowest point since November 2023. These tariff policies seem to be weighing on consumer sentiment, creating a disconnect between business optimism and household economic outlook.
With President Trump's administration now in office since January 20th, the headlines have been dominated by discussions of tariffs—implemented, paused, or renegotiated. Small business owners and consumers alike are watching closely to see how these policies will impact the broader economy. If falling consumer confidence leads to decreased spending, it could create challenges for small businesses already facing rising costs and supply chain disruptions caused by the tariffs.
First Month in Office: Tariff Negotiations and Market Uncertainty
Donald Trump has used tariffs as a key tool during his first month in office to influence trade negotiations. The administration has already imposed 10% tariffs on all Chinese goods and 25% tariffs on steel and aluminum imports. It is also studying the implementation of reciprocal tariffs on other trading partners, potentially due in April. Tariffs on Mexico and Canada remain a possibility, despite a temporary pause announced in late January.
The heavy focus on tariff negotiations and policy shifts in recent weeks has captured widespread attention. Both consumers and small business owners are closely monitoring these moves, recognizing their potential for significant business and economic implications in the months ahead.
How Main Street is Responding to New Trade Policies
BizBuySell's quarterly Insight Report, a nationally-recognized economic indicator that tracks the health of the U.S. small business economy, surveyed over 2,000 members of the small business community on a variety of pressing issues for Main Street. Among the issues surveyed was how proposed trade policies (such as tariffs) are affecting business planning for 2025.
Just over 50% of business owners responding report that tariffs and trade policy are currently having no impact on business decisions. For owners whose businesses are being affected, 20% are passing any increased costs onto customers, 15% are looking for alternative domestic suppliers, while 10% are seeking alternative international suppliers. Owners are also considering delaying major purchases or investments (14%), adjusting inventory management (14%), and accelerating major purchases or investments (7%) as they navigate changing and evolving trade policies.
Economic Resilience: Small Businesses Face Headwinds While Maintaining Optimism
BizBuySell's survey show that small businesses are holding their own despite challenges. Over 80% of owners report that business is either improving (48%) or remaining steady (33%) compared to last year. However, rising expenses remain a concern for the vast majority (78%). Only 26% of respondents believe inflation is easing.
For the 20% of small business owners experiencing a downturn, key issues include fewer customers (62%), reduced customer spending (54%), and higher costs (52%). With consumer confidence trending downward, more Main Street businesses could feel the pinch of shifting trade and tariff policies in the months to come.
Still, the overall economic outlook remains positive. Business owners expect 2025 growth to be supported by tax cuts, reduced regulations, and labor-friendly policies like allowing tips to remain untaxed. Even with uncertainties stemming from new trade policies, many small businesses are optimistic about the year ahead. The resilience, adaptability, and confidence demonstrated by Main Street businesses continue to drive the U.S. economy forward.