 Photo Credit: Reuters By William Ballard When you hear the phrase “trade war,” you might picture suited politicians hashing out deals behind closed doors, or maybe news tickers spinning tales of global unrest. But dig a little deeper, and you’ll find the real battlefield isn’t just in Washington or Beijing—it’s Main Street USA, where entrepreneurs and small business owners are grinding it out every day. Unless you've been hiding under a rock, you know that Trump's Tariffs have been dominating the headlines, but what does it really mean for the everyday business owner? Are tariffs just a blip on the economic radar, or a seismic shift that could redraw the landscape for years to come? In this deep dive, we’ll cut through the noise, break down the basics, and hear from voices in the trenches. Buckle up—trade policy just got personal. The Business Connection of Trump's Tariffs Before we can grasp the impact, let’s rewind a bit. President Donald J. Trump came into his second term promising, once again, to “Make America Great Again”—and part of that, for him, meant shaking up global trade. Trump’s team argued that America was getting a raw deal, especially with China, Mexico, Canada, and the European Union. In their eyes, tariffs—essentially taxes on imports—were a way to level the playing field. Within Trump's first hundred days of his second term, his administration has slapped tariffs on hundreds of billions of dollars’ worth of goods, targeting steel, aluminum, electronics, machinery, automobiles, and even everyday items like clothing and shoes. But here’s the kicker: These aren’t just abstract numbers on a spreadsheet. Tariffs ripple through supply chains, affect prices, and—like a stone tossed in a pond—create waves that hit everyone from Fortune 500 CEOs to the owner of your local coffee shop. Tariffs 101: What’s the Big Deal?Let’s break it down. A tariff is, at its core, a tax on imported goods. When the U.S. slaps a 25% tariff on, say, Chinese steel, American companies that rely on imported steel now have to pay more to get it. The aim? Either push these American companies to “Buy American” or make foreign competitors less attractive - thus empowering American manufacturing and/or encouraging foreign enterprises to invest in America. Now, with that said, that doesn't mean that accomplishing this can't or won't get messy. Here’s how tariffs can impact businesses:
For a small business, even a minor uptick in costs can mean the difference between profit and loss. A Little History on American TariffsJohn Steele Gordon, author of An Empire of Wealth: The Epic History of American Economic Power (AFF), asserts, "When the Constitution took effect in 1789, the first order of business was to straighten out the nation’s disastrous financial situation. That is why the new State Department started out with only five employees while the Treasury Department had 40." He goes on to say that when Alexander Hamilton became the nation’s first Secretary of the Treasury, he immediately began to prepare a schedule of tariffs, along with excise taxes on such commodities as alcohol and tobacco. The Constitution forbids taxing the exports of any state, and so American tariffs have always been laid only on imports. Now, according to Mr. Gordon, Hamilton’s tariffs, along with the refunding of the national debt and the establishment of a central bank, transformed the American financial situation. He states, "By the end of the 1790s, the U.S. had the best credit rating in Europe, its bonds selling over par. By 1800, federal revenues, a mere $3.7 million in 1792, had nearly tripled to $10.8 million. About 90 percent of that revenue came from tariffs—a ratio that wouldn’t change much, except during the Civil War, for more than a century." That said, tariffs, up to that point, were solely used for the purpose of increasing revenues and helping to pay down the National debt. However, they can also be used to protect domestic industries from foreign competition. Mr. Gordon goes on to mention how at that time, high-quality cloth was always imported from Britain, which is why during George Washington's first inauguration he was careful to wear a suit woven in the US -- which wasn't of the best quality, but it was a symbolic gesture. That said, Britain was where the technology for spinning and weaving cloth was, and Britain was determined to keep it there. They did this by keeping the intellectual property and technology of it banned from exporting. Moreover, people who had the expertise in the industry were not allowed to emigrate to America, or any other country for that matter. That was before Samuel Slater, a man who was trained in this artistry, sailed to America having listed himself as a farmhand on the ships manifest -- essentially, the beginning of industrial espionage. Within a year (around 1793) while using capital from Rhode Island’s Brown family, Mr. Slater had the first American spinning mill operating in the North. And that was also around the time of the invention of the Cotton Gin by Eli Whitney in the South. Thus, the American Industrial Revolution had begun--and with it a push for protective tariffs. Mr. Gordon asserts, "Protective tariffs have a surface plausibility, especially where new industries are just getting on their feet and are not yet as efficient as older foreign ones. But tariffs, as noted, are taxes, which are largely paid by domestic consumers, not foreign manufacturers. They also often allow domestic manufacturers to raise their own prices." That said, it was around 1824 when manufacturing jobs in America began to skyrocket -- over two million people, ten times the number five years earlier. However, it is important to understand that tariffs are a consumption tax and therefore fall hardest on the poor, who must spend all their income to buy necessities. So, around 1861, when the Civil War broke out, there was increasing political pressure for an income tax on the rich to be implemented as means to lower tariffs. Now, moving a bit forward into the future, it was around 1947 when 23 countries met in Geneva, Switzerland to establish the General Agreement on Tariffs and Trade (GATT). The core individuals of that meeting called for a “substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis.” That said, many believe this reciprocal idea came from Trump, but in reality, it goes back further than him. In 1995, GATT then evolved into the World Trade Organization (WTO). And then in 1999, Communist China, which had seen explosive economic growth after the death of Mao Zedong in 1976, was then granted admission to the WTO under the terms that it would follow the rules. However, it has not done so for many years. In fact, it has been guilty of massive theft of intellectual property and its nefarious trade policies has made exports the centerpiece of its economy. Now, what Trump is attempting to do in his second term is, instead of taxing the American rich and middle class -- what the politicians of the 1800s were considering -- he is suggesting that foreign companies invest in the US as a solution to not have to pay the high tariffs, which would then create more manufacturing jobs in America, thus making America the leader in manufacturing again and increasing job growth. Moreover, he is also trying to get his "Big, Beautiful Bill" passed, which includes the largest tax cuts in American history as a means to refrain from entering into the same situation that took place in 1861, around when the Civil War broke out, and when the high consumption tax issue affected the poor and middle class the most, demanding they spend all their hard earned income to buy necessities. In other words, instead of doing what other countries do, paying their workforce in pennies and profiting off their tariff revenues from exports, he is suggesting we allow our workforce to pocket more of our hard earned wages while at the same time paying down our debts through the revenues we make in tariffs from other countries, which is essentially what the GATT college was all about. Who’s Feeling the Pinch? (Hint: It’s Not Just the Big Guys)Now, you might think tariffs are just a headache for multinational giants, but think again. Small and medium-sized businesses—often operating on razor-thin margins—are especially vulnerable. For business owners like Chasity Monroe, owner of Pink Noir, a hair and beauty supply store in Memphis, Tennessee, she told NBC News, "It’s just been really scary for a small business that’s not been open long,” as she explains how she has already seen suppliers increase their prices, which she will have to tack onto the customer product prices. On the other hand, according to the National Federation of Independent Business (NFIB), "In April, the percent of small business owners reporting poor sales as their top business problem remained at 9% for the fourth consecutive month. A net negative 8% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, up three points from March and the highest reading since September 2023." Nevertheless, the pain is widespread. It's not just manufacturers, but retailers, farmers, tech startups—all are caught in the crossfire. From craft brewers struggling to source aluminum cans to farmers facing shrinking export markets, everyone feels something from a tariff. The Winners and Losers of Trump's TariffsLet’s not sugarcoat it: Some businesses benefit from tariffs. If you’re a domestic steel producer, for example, tariffs on foreign steel can boost demand and prices for your product. But for every winner, there are often several losers. Winners:
Mary Lovely, professor of economics at Syracuse University said, “Trade wars are easy to win? Tell that to the small businesses who can’t just absorb a 25% increase in costs overnight." Now, with that said, it's been taught in business schools that in free market system, like we have, that competition is a good thing. But I've always asked the question: for who? You see, in a capitalist, free market system, competition is good for the consumer (it gives the consumer options on who they buy their goods and services from), but in my opinion, it's not necessarily all that great for the business owner. Real-World Tariffs ScenariosLet’s get concrete. Here’s how Trump's Tariffs are playing out in different sectors: 1. Manufacturing
2. Agriculture
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