Many small businesses for us could face a financial tightening as President Trump reciprocal Take effect on Wednesday, by slapping new import rights on products from almost all countries around the world.
Some small businesses have told CBS News that they were concerned about the impact of the sharp increase in prices that they will soon have to pay the federal government. After paying the samples, they said they will end up with two choices: increase the prices they charge to customers or swallow the costs and take a financial blow.
Small businesses, generally defined as companies with less than 500 employees and income of less than $ 7.5 million, almost count half Of all the jobs of the private sector in the United States, but they are also more vulnerable to tariff costs because they do not have the deep pockets or the financial flexibility of large companies, noted Aaron Terrazas, economist at Gusto, which provides payroll and HR services to small and medium-sized enterprises.
“For many small businesses, this is a one-two punch,” said Terrazas. “They obtain higher prices from suppliers, and their customers are tighter” just as they are struggling with heavier prices.
Among these companies which counts with the additional costs are simplified, an online stationery company that has manufactured its colorful planners in China since 2013. Its owner, Emily Ley, told CBS News that new reciprocal prices “will have a devastating impact” on its company, which costs it additional $ 630,000 in terms of next year.
On April 3, Ley filed a trial alleging that Trump has exceeded his authority to dictate import rights. Under the Constitution, the Congress has the power to impose prices and regulate foreign trade.
With the kind permission of Emily Ley 
“This additional tax burden is catastrophic for our business,” added Ley. “We have already increased our prices as much as possible to absorb the previous price increases. There is a limit to the amount of price that we can increase prices before assessing the market.”
To deal with costs, she said that the company reduced wages and reduced expansion plans.
Recipe for a revival?
Trump said prices will rekindle American manufacturing by encouraging national and foreign companies to build factories in the United States, but on small businesses, which generally operate on a slim, generally do not have the capacity to quickly move their supply chains or build local production facilities given the higher labor cost in the United States
Even large companies that have the financial weight to bring its factories to the United States, like Apple, would require years to build a factory in the United States, noted that Wedbush analyst Dan Ives in a research note on April 8.
“Maybe over time, we will build a supplier base, but it takes time,” said Terrazas. “But in the meantime, there is this transition period which is very dangerous for small businesses.”
Not all small businesses cannot wait for so long. Alyssa Chambers, the founder of Nova Essence Inside Out, who makes candles and other well -being products, said that she planned to absorb the cost of the prices applied to candle pots and the waxes on which she relys – for the moment.
Chambers said that she would reassess her business prices towards the end of the summer and according to the state of the economy.
For small businesses, the purchase of American manufacturers is not really an option, added Chambers, noting that a candle jar made in the United States costs around $ 12 each. On the other hand, she can buy a pack of 15 pots made in China for about $ 20. Although it expects this price to reach around $ 40 after the prices hit the house, it is even cheaper than buying at the national level.
Other small businesses simply do not have the possibility of buying from national manufacturers, said Matt Weyandt, co-founder of the Xocolatl chocolate. Because cocoa is grown near the equator, very little can be cultivated in the United States, he noted.
“Despite this, we will now pay 10% or more for all our cocoa beans in addition to their already high prices,” said Weyandt. “This will not bring jobs in cocoa agriculture in the United States or increase American manufacturing – it will simply injure American chocolate manufacturers.”
Admittedly, there are small businesses that could continue to prosper even with higher prices Terrazas. This includes manufacturers of national foods or health care companies that do not depend on imports, such as older care companies or people.
Tight consumers
Small businesses are facing prices, just as Americans become more pessimistic about the economy, with consumer confidence sagging at a hollow of 12 years last month.
“In the long term, American consumers are really remarkable. But in the short term, it’s difficult,” said Kevin Klowden, Milken Institute economist, a reflection group. “It’s really different because it is an intention to force a structural change.”
But, added Klowden, Trump does it “by considerably putting pressure on the cost structure of the whole system”.
It remains to be seen if consumers tired of inflation will accept corporate price increases. If the prices are not reduced, inflation could resume this year, reaching high at 4% by the end of the yearAgainst around 2.8% currently, according to Wall Street economists.
“It’s a high risk moment for the economy,” said Terrazas.
And
contributed to this report.