To Tariff or Not Too Tariff
Dave Walker
Advancing the Business-to-Small-Business (B2SMB) Ecosystem - Fortune 50 CMO, Agency CEO, Entrepreneur & Investor
Each week I scan my Google alerts on key stories that impact the Small Business Marketplace. In the last few weeks, my feed has been heavily weighted towards the varying degrees of dread and disaster tariffs have wrought on SMBs. And while my intent is to pass those stories on to you with a minimum of political bias and blame, it’s not hard to assign their root origins.
As of Thursday morning, with the 90-day stay of the massive array of “reciprocal” tariffs announced last week, my feed is now overwhelmed with a collective sigh of relief (?), a consensus that we are “taking stock” of how we go about addressing the well-documented inequities of our global trade.
I’m taking this pause in the action to understand what I’d like to understand.
Setting aside the critical measures of current SMB sentiment (see prior issues of this newsletter), I’m going to use this time on the bench to ask some questions that I’ve not yet seen asked or answered - at least in my feeds.
And I want to start with this one: What benefits do tariffs create for Small Business?
In a nutshell, it depends.
Like all things SMB Marketplace, the fragmentation of so many millions of very different participants creates a huge variety of winners and losers, mostly depending on industry, supply chain structure, and business model.
But let’s take as high-altitude a look as possible, focusing on advantages created in our domestic market:
Increased Demand for Local Products
When tariffs raise the prices of imported items, customers often look for domestic alternatives, creating new opportunities for American small businesses. This shift in consumer behavior can open up market segments previously dominated by foreign competitors.
A Competitive Edge for American-Made Products
If tariffs can make domestically produced goods more price-competitive than imported alternatives, Small businesses that already manufacture in the US may find themselves with a sudden price advantage over competitors who rely on imports.
“Reshoring” Opportunities
Over time, tariffs on foreign goods from countries like China, Mexico, and Canada could make manufacturing in the US more economical than importing goods from abroad. But this is a long-term play: it will take years for small businesses to participate in revitalized domestic supply chains.
Price Stability as a Marketing Edge
Small businesses that source materials domestically can market their price stability as a competitive advantage during times when import-dependent competitors are forced to raise prices. This can be particularly valuable for winning long-term contracts where price predictability is valued.
Protection from Foreign Competition
Tariffs can shield US enterprises - however small - from foreign competition, allowing small domestic businesses to establish or expand their market presence or to adapt and grow their operations.
Industry Growth and Innovation
Necessity is indeed the Mother of Invention, and tariffs will likely motivate SMBs to innovate their way out of the problems they face (as they so often do.) New products or services that meet the growing demand for American-made alternatives can become break-away winners.
Supply Chain Resilience
Covid taught Small businesses the benefits of shorter supply chains and greater onshore production. With the added pressure of tariffs, these benefits are amplified, potentially creating a more stable and resilient business environment in the long run.
Domestic Manufacturing Growth
The tariffs are expected to spur continued growth in domestic manufacturing and the integration of new technologies that promote automated production. Small businesses positioned to participate in this manufacturing renaissance may find new opportunities for growth.
Three words that should be applied liberally: might, could, and if.
We might…
We could…
If…
Uncertainty does not settle well in our big brains.
On to the news!
The Best Summary of the Tariff Pause
USA TODAY wins my personal thanks for presenting the most detailed and fact-based reporting on our collective WTF moment Wednesday. Surprising/not surprising how awful the reporting has been on the whole subject of tariffs.
5 Ways AI Can Mitigate the Impact of Tariffs
I have to admit - the title of this piece had me. The battle of titans! AI vs. Tariffs in a Royal Rumble! But seriously - PYMNTS editorial staff cites a number of operational leads as they point to what AI can help solve when it comes to tariffs. From keeping up with the hourly changes in policy direction, to researching alternative sourcing, to improved productivity (that old trope!)
The Not-Knowing of Everything
The Wall Street Journal ’s @Xavier Martinez calls tariffs the “oft-whispered boogey-man” of Small Business customers as they wander the retail aisles. The uncertainty is an even bigger scare to SMBs. One shop owner describes her rollercoaster: “The team changed prices on our Canadian-sourced items when 25% tariffs were unveiled Feb. 1, reverted them when the plans were delayed by the Trump administration, and then re-instituted the increases once they kicked in March 4.” SMBs are not only dealing with the uncertainty of what will happen next, but the more crippling doubt in doing what needs doing.
“Averting Your Eyes” Is Not a Strategy
We cannot overestimate the stress on SMBs right now. Many tell me it is significantly greater that what they experienced during Covid, and THAT left a mark. Forbes @Tiffany Grant gives a somewhat clinical analysis, but her main point on SMB Financial stress is unavoidable: don’t avoid it. Face the problems one by one in their legion and get to work.
Data Won’t Wait
Rhett Power in Forbes submits that “legacy data systems” are a significant barrier to the insights and opportunities that live in a company's bits and bytes. AI, he says, is the can opener that gets to the good stuff. For instance, “Instead of manually pulling reports from disparate sources, AI-driven analytics automate data integration and provide real-time organizational visibility.” No more excuses or “if we could only”’s.
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Go Big. Sell Small.
Dave
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4moThanks for your insight and summary of the news Dave Walker. Great and useful content!