Small businesses bear brunt as Trump tariffs reshape global trade

The end of the "de minimis" tariff exemption, which previously allowed goods valued under $800 to enter the U.S. without additional duties, has significantly impacted American consumers and businesses. This policy shift, announced by U.S. President Donald Trump, was part of a broader strategy to reshape global trade dynamics and protect domestic industries. However, it has reduced purchasing power for U.S. consumers, particularly for everyday goods such as clothing, electronics, and household items that were once available at lower prices from international e-commerce platforms like Shein and Temu.

The removal of the de minimis threshold has forced many U.S. importers to absorb higher costs, which they have increasingly passed on to consumers. Analysts warn that as tariffs apply to a broader range of goods, the inflationary impact will continue to grow. For example, a study by The Budget Lab at Yale University estimated that U.S. households could face an additional $2,400 in costs by 2025 as a result of these tariff policies. The effect is not uniform, with some companies leveraging their global manufacturing networks to benefit from the new regime, but for most businesses—especially smaller ones—the financial burden is palpable.

Small businesses are particularly vulnerable to the new tariff environment. Many lack the financial flexibility or lobbying power to adjust their supply chains quickly or absorb additional costs. Some have resorted to cutting staff, reducing expenses, or even considering closure, according to recent reports. Others are exploring alternative revenue streams, such as repurposing facilities for storage or logistics, to offset rising import costs. For example, Busy Baby, a manufacturer of baby products, began offering warehouse space to other companies to generate extra income, though this has only partially alleviated the financial strain.

The overall economic impact of the new tariffs is complex. While some firms, such as David's Bridal, have leveraged their pre-existing global manufacturing infrastructure to benefit from the policy shift, most U.S. businesses face significant financial strain. David's Bridal, which operates manufacturing facilities in countries like Vietnam and Sri Lanka, reported increased revenue as other companies sought to use its facilities to avoid higher U.S. import duties. However, this is a rare success story, as the majority of businesses are struggling to adapt. Large corporations like Nike have estimated hundreds of millions in additional costs, and many are forced to raise consumer prices to remain viable.

The broader economic implications of the U.S. tariff policy extend beyond American borders. Experts warn that the policy is likely to exacerbate economic challenges in the Global South, particularly in countries heavily reliant on cheap exports to the U.S. market. These countries often lack the fiscal capacity to absorb the shock of higher tariffs and may be forced to adopt "beggar-thy-neighbour" strategies, such as currency devaluation or protectionist measures, which could further destabilize the global economy. The International Monetary Fund and the Organization for Economic Co-operation and Development have already revised their 2025 global growth forecasts downward, citing the tariff-driven uncertainty and volatility.