
sponsored by: National Retail Federation
On November 5th, people around the world watched and waited with anticipation to learn who would be the next U.S. president in what many consider one of the most historic and consequential elections to date. Now, as President-elect Donald Trump prepares to take office, the world is watching once again — this time to see which campaign promises will come to fruition. Chief among them? The president-elect’s proposed tariffs. Already dominating the news cycle as one of the most hotly debated policies, tariffs, and their potentially far-reaching economic consequences, have sent ripples of concern across the globe.
On the campaign trail, Trump’s proposed tariff hikes ranged from 10 percent to 20 percent on all imported goods and 60 percent to 100 percent on imports specifically from China. More recently, however, those numbers have changed: In a recent social media post, the president-elect pledged tariffs of 25 percent on imports from Canada and Mexico and an additional 10 percent on imports from China.
While many associate tariffs with protecting industry and stimulating the economy, industry leaders warn that it is consumers and businesses — both domestically and abroad — that will actually take the hit.
“While tariffs can be a useful and necessary tool on a global level to ensure we have fair and balanced trade relationships with our trading partners, that’s not what we’re seeing in these proposals,” says Matthew Shay, president and CEO of the National Retail Federation, the world’s largest retail trade association. “There’s concern that if tariffs are applied indiscriminately, blanketing across all categories of goods, they could have a negative and far-reaching effect globally.”
Until concrete policies are in place, it’s impossible to predict what will happen around the world, but economists have hinted at some of the possibilities, which include potential trade wars, a yearslong reduction of global GDP growth, as well as falling GDPs in Mexico, European countries, China and the U.S., and rising inflation. In fact, a recent economic study exploring what Trump tariffs would mean for Europe estimates that eurozone exports to the U.S. could fall by nearly a third if the EU sees an across-the-board 10 percent tariff. And, according to the Peterson Institute for International Economics, global retaliation could more than double the losses from U.S.-imposed tariffs.
While it remains unclear how exactly the global economy will adjust, one thing is certain: The economic volatility is already being felt, with businesses, both large and small, bracing for what’s to come.



The Domestic Consequence
A tariff is an import tax, or a fee placed on goods brought in from another country. That tax is almost always paid by the business importing the goods — the American company. It’s a common misconception that the foreign business exporting the goods pays. Historically, tariffs were used by governments to protect local industries and incentivize consumers to purchase domestic goods. They were also often deployed as a response to trade imbalances, acting as a form of retaliation against other countries’ policies. However, following World War II, tariffs came to be seen as detrimental to global trade, as they inflated costs for consumers and triggered retaliatory actions by trading partners.
In 2018, Trump shifted that manner of thinking and imposed nearly $80 billion on American consumers through tariffs. The Biden administration kept Trump’s tariffs in place and added tariffs on additional Chinese goods, such as superconductors and electric vehicles. Researchers have found that costs for the Biden and Trump tariffs have been passed along almost entirely to U.S. businesses and consumers. More specifically, the Tax Foundation reported that between 2018 and March of 2024, U.S. taxpayers had forked over an additional $233 billion since 2018, thanks to tariffs.
While Trump has suggested that new tariffs will fuel a home-grown manufacturing boom and bring good jobs back to the U.S., the reality is more complex — and the consequences are far-reaching. Shay notes that, more than anything else, the brunt of tariffs will hit the pocketbooks of consumers and the cash registers of small businesses in the heart of America. “It’s an indisputable outcome that tariffs raise prices, that tariffs are paid by the importer and those costs are passed on to consumers,” says Shay. “It’s like the laws of gravity and physics.”
“It’s an indisputable outcome that tariffs raise prices, that tariffs are paid by the importer and those costs are passed on to consumers. It’s like the laws of gravity and physics.”— Matthew Shay, President & CEO, NRF
According to a recent study by NRF, American consumers stand to lose between $46 billion and $78 billion every year the tariffs are in place. In addition, small business owners, who have less negotiating power than large corporations, could stand to suffer outsize consequences.
“Imposing blanket tariffs doesn’t achieve anything for our national economy other than raising prices for American families,” says Shay. “Tariffs punish U.S. consumers, workers and businesses more than they punish China.”


Price Tag Pressures

A $119 leather handbag could increase to $134 – $145.

A $50 tricycle could increase to $68 – $78.

A refrigerator could increase from $650 to $776 – $852.

A coat that costs $100 today, could increase to $112 – $121.
To understand what impact Trump’s newly proposed tariffs could have on consumers and the U.S. economy, a recent NRF study spotlights six product categories: apparel, footwear, household appliances, furniture, toys and travel goods. The findings offer a telling glimpse of how prices could increase in the future.
Altogether, the report says these increases could reduce the U.S. GDP by up to $50 billion and the average household spending power by $362 to $624 for as long as the tariffs remain in effect.READ THE FULL REPORT
The High Cost for Communities
For small businesses who rely on imported products to meet the demands of their customers, tariffs don’t just mean higher costs — tariffs can translate into real, immediate and lasting business disruption. A sudden spike in the price of imported goods could mean the difference between staying afloat or closing their doors for good.
“While it’s clear that tariffs are a useful and necessary tool to ensure that we have fair and balanced trade relationships with our trading partners, the current tariff proposals are concerning because they blanket across all categories of goods,” says Shay. “They’re highly inflationary, and they’ll have a significant impact on small businesses, who will have no choice but to pass those costs along to working families.”

Small Businesses in
the Crosshairs
01
The Luggage Shop of Lubbock
Potentially passing along costs to consumers is a decision that Tiffany Zarfas Williams knows well. Her family-owned shop, The Luggage Shop of Lubbock, in Texas, was hit hard when Trump instituted tariffs in 2018 that impacted a variety of Chinese-made goods, including luggage. “The tariffs impacted about 80 percent of what was in our store,” says Zarfas Williams, who is the third generation in her family to be involved in the Texas shop, which opened in 1951. Because her prices are dictated by her suppliers, she was forced to raise them significantly: A suitcase she could sell for $100 before the tariffs went into effect now sells for $160, while a carry-on priced at $425 shot up to $700.
In addition to increasing prices, she’s also had to shift her inventory in order to maintain a wide range of quality items for shoppers at every price point. “I still need to have $100 bags for my opening price point, but with the tariff added in, it’s just not going to be quite as nice as the $100 bag I had before,” she says. “It’s disappointing because you want to sell the best. I want you to buy the best that you can afford.”
Now, Zarfas Williams worries about the possibility of more tariffs. If that becomes a reality, she says she’ll have to raise prices again, and, again, change her merchandise mix. This time around, she may also have to make some difficult decisions about expenditures, including how many staff she employs and her advertising budget. It’s a lot of worry for a business owner to shoulder, and she’s made it her mission to try and set people straight about what tariffs are and who pays for them.
“How do we combat the message that China pays the tariffs? That sounds so great — it would be so awesome if China was paying the tariffs,” she says. “But the person who is ultimately paying that tariff is the person who comes into my store looking to buy travel goods and luggage for their next trip.”

02
Stephenson’s of Elkhart
In the retail industry, change is always a given. But with a change as potentially tumultuous as these tariffs, many business leaders aren’t sure what, if any, steps they can take to prepare.
In Elkhart, Indiana, Danny Reynolds tells the story of how his family store, Stephenson’s of Elkhart, grew from a humble 1,000-square-foot dress shop that opened in 1931 to a 15,000-square-foot special-occasion apparel store filling three three-story buildings downtown. But now, Reynolds worries that tariffs will threaten the company’s ability to sustain the exceptional customer service and quality products they have come to be known for. “We are not known to compromise on the quality of the product that we offer,” says Reynolds. He notes that his store focuses on “hands-on customer service” and high-quality goods, but that tariffs could escalate costs — particularly for products imported from China — and ultimately prohibit them from competing with large chains.
Wedding gowns and formal wear, which are primarily imported from China, are of particular concern. “In Elkhart, Indiana, a $1,500 to $2,000 wedding gown is already a pretty big-ticket item,” says Reynolds. With tariffs potentially doubling those prices, he fears it could price families in his community out of the market. He acknowledges that he supports efforts to incentivize made-in-the-USA production but stresses that, when it comes to wedding fashion, “it’s just not that simple.”
If American-made wedding gowns are brought to market, they would be priced well beyond what his customers can afford. “If any revenue is going back into the cost of our goods, we can’t hire new people,” he says. He notes that the high overhead costs of running a retail operation, from staff to utilities and credit card fees, are already a significant burden, and tariffs would only make it harder for his business to thrive and maintain its position as a family business that has been a cornerstone of its community for nearly a century.

03
Balsam Hill
The same rings true for countless businesses that have come to rely on supply chains in China, which is the second-largest source of U.S. imports, reaching $427.2 billion in 2023, according to the Congressional Research Service. Balsam Hill, a company that’s headquartered in Redwood City, California, and is known for its high-end artificial Christmas trees, would have difficulty manufacturing those trees at the volume needed outside of China, says Nat Roland, who is executive vice president of legal and regulatory and general counsel at Balsam Brands. The realistic, easy-to-assemble trees are modeled after Fraser firs, with hand-painted needles and hand-wound branches, and are a top seller for the company, which does more than $250 million in revenue each year. “There is some manufacturing that’s done outside of China, but it’s not sufficient to serve the U.S. market,” says Roland. “And no one in those other countries, as far as I know, has capacity to fill our orders or to have anywhere near the quality that our current manufacturers do.”
If the tariffs were to go into effect even at 50 percent, Roland says the company would likely have to raise prices by more than 40 percent. “So if you took a tree that we typically sell for $500 today,” he says, “that would have to go up to over $700 in order for us to break even as to where we are today.”
Further, to absorb the remaining tax increase, Roland says Balsam Brands, which is the parent company of Balsam Hill, would have to make some tough choices about hiring and vendor services. He said they’d need to go into survival mode, and if they were to invest in growth, that would likely happen in markets outside of the U.S., where their products aren’t prohibitively expensive.
“We would continue to try to serve our customers and create joy and celebrate in grand style, which is our company’s purpose,” says Roland. “But how we would do that, I don’t know.”

The Road Ahead
“We know this election was largely decided based on frustrations over the high prices of the last three years. It would be enormously counterproductive to pursue political policies that are going to have the exact opposite effect of what the American public just voted for.”— Matthew Shay, President & CEO, NRF
In order to succeed, small business owners have always had to become experts at evolving. In just the last five years, they’ve faced a pandemic, supply chain disruptions, inflation, increased shipping fees, rising credit card fees — and now, tariffs. It leaves some wondering just how much more they can take. “We can only absorb so much when you have things like heat, air, lights, water and staff,” says Reynolds. “All this stuff adds up to high overhead.”
Small businesses aren’t just engines of the economy. They’re also the hearts and souls of their communities, creating jobs that support families, generating tax revenue that helps municipalities grow, and contributing to local organizations and causes that improve their own neighborhoods and add to a city’s color and character. If these businesses are burdened with rising costs and shrinking profits, the consequences could be catastrophic — not just for owners, but for the communities they serve.
“If you have small businesses getting hit hard and they either start laying people off or going out of business altogether, it could start a downward spiral where prices are going up while the American consumer is starting to pare back on spending,” says Roland. “The cumulative effect of that is really significant.” This spiral could lead to further job losses, increased unemployment and a growing wealth divide between big corporations and the small independent enterprises that form the backbone of the economy.
When Shay considers the possibility of tariffs, he says that some industries may, indeed, benefit from them. But he doesn’t believe those benefits will outweigh the widespread losses that will be felt by families, communities and small businesses on ‘Main Street’ and beyond.
“We know this election was largely decided based on frustrations over the high prices of the last three years,” he says. “It would be enormously counterproductive to pursue political policies that are going to have the exact opposite effect of what the American public just voted for.”
The cost of tariffs, while concentrated in certain industries, will ultimately be borne by everyone, from the businesses that are forced to increase prices to the workers who face the threat of layoffs. This creates a paradox: Tariffs designed to protect U.S. businesses could inadvertently weaken the very economic structures that they are meant to safeguard.
Ultimately, the road ahead for small businesses isn’t just about navigating the day-to-day challenges of operating in an unpredictable economy. It’s also about sustainability: Can small businesses thrive in an environment where increasing costs and shrinking margins are a daily reality? Small businesses need both protection and opportunity to grow, and while tariffs may be a tool for achieving fair trade, they should not come at the expense of the economic foundation of communities. The need for strategic, thoughtful policies that support small businesses in both the short- and long-term has never been more urgent.
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