Small businesses across the country are considering the impact of President Donald Trump's 145% tariff on Chinese imports, with some weighing potential layoffs if the situation persists.
Steven Borrelli, founder of Cuts Clothing, a multimillion-dollar brand, expressed concern about the implications of China tariffs on his company. "We don't want to lay off anyone or fire anyone, but that's what's going to have to happen if this lasts much longer," Borrelli told Investor's Business Daily.
Stocks rallied Thursday on President Trump's trade deal with the UK. And the New York Post reports the administration is weighing a plan to slash China tariffs to 50% as soon as next week. Trump posted on Truth Social Friday that he was mulling an 80% tariff on China ahead of trade talks this weekend. A deal with China could provide some relief — or at the very least some clarity — for small businesses trying to make financial decisions amid tariff uncertainty.
Small-Business Owners Weigh Tariff Impact
Jee Kim, owner of the Korean restaurant 8282 in Manhattan, is concerned about rising costs, particularly those related to goods sourced from China. "I don't know if that's going to be a gradual or a very steep incline, but definitely going to expect prices to increase," she said. "Right now we're trying to absorb it as much as we can."
On April 1 — a date the White House dubbed "Liberation Day" — President Trump unveiled sweeping new tariffs, marking the most significant overhaul of global trade policy in decades. China faced the steepest penalties, with the U.S.-imposed tariff rate currently a whopping 145%.
Trump Optimistic On U.S.-China Talks
But on May 8, Trump suggested U.S.-China tariffs could go down, saying: "We're going to see. Right now you can't get any higher. It's at 145% so we know it's coming down. ... We're going to have a good weekend with China," Trump said.
Beijing in recent weeks reached out to Washington about curbing fentanyl trafficking, opening the door to renewed trade talks and setting the stage for a bilateral meeting in Switzerland over the May 9 weekend. This marks the first direct talks between the two countries over trade during Trump's second term, the Wall Street Journal reported, citing people familiar with the matter in both countries.
Borrelli, who started his company in 2016 without outside funding, has considered raising capital for the first time to survive the escalating China tariffs if the trade conflict isn't resolved soon.
"There's a lot of things that we need to fix in order to overcome these tariffs. But it's hard to overcome them if you don't know what they are long term," he said.
Kevin O'Leary On Trump Tariffs
Investor and "Shark Tank" star Kevin O'Leary has been a vocal advocate for cracking down on China, calling for tariffs as high as 400% if needed to fight unfair trade, protect American businesses and bring China to the negotiating table.
"Trump has to do this now because he's got a time bomb in the midterm elections. Xi can't wait two years. He's got to get this resolved too," O'Leary told Investor's Business Daily. "Unfortunately, one of the derivatives of this kind of negotiation is volatility. And we're in the middle of it now."
Business Owner Sounds Alarm On Trump Tariffs
In mid-April, Borrelli wrote an open letter to Trump on X, warning that prolonged tariffs could lead to more business failures. "Every day this continues, more businesses will fail. Solving one issue but hurting the very people who voted for you is not the best outcome," he posted. The post has been viewed over 2.4 million times.
U.S. Treasury Secretary Scott Bessent has indicated that the ball is in China's court to de-escalate trade tensions. "I believe that it's up to China to de-escalate because they sell five times more to us than we sell to them. And so these 125%, 145% tariffs are unsustainable," he said during an April 28 appearance on CNBC.
Recession Risks And Supply-Chain Strains
Economic analysts are also raising concerns of a looming recession. Tortsen Slock, chief economist at Apollo Global Management, noted in an April 27 report that empty store shelves could become a reality in the coming weeks, with a 90% chance of a recession this summer at current tariff rates. He also predicted that the flow of container ships from China to the U.S. could come to a halt.
O'Leary emphasized the importance of supporting small businesses, especially with the potential for a bumpy road ahead as tariff negotiations continue. "The way I look at small businesses is that they account for 62% of all job creation. ... Small business is the American economy," he said. "So we should care a lot about what they think."
Is It 'Main Street's Turn'?
The Trump administration has pledged to uplift Main Street. "For the next four years, the Trump agenda is focused on Main Street," Secretary Bessent said during his American Bankers Association keynote address on April 9. "It's Main Street's turn to hire workers, it's Main Streets turn to drive investment, and it's Main Streets turn to restore the American dream."
But for business owners like Borrelli, the American dream is in limbo. "There's a ton of small e-commerce companies that represent that American dream. And we don't have as big a budget as some of the Nikes and Lululemons of the world have, but we want to be a part of that. And don't kill us in an effort to accomplish that," Borrelli said.
Kim also expressed concern, saying business owners just need clarity from The White House. "I think what worries me the most is the uncertainty," Kim told IBD. "There needs to just be a direct answer, and then it's like, 'OK, how are we going to resolve this?'"
Many businesses currently source their goods from outside the U.S. The prospect of establishing significant manufacturing operations domestically presents challenges. O'Leary estimates it would take businesses at least 10 years to bring manufacturing completely back to the U.S.
O'Leary also said he doesn't think Americans will be interested in manufacturing jobs. However, he's bullish on artificial intelligence and robotics; he expects those technological advancements to play a big role in the future of manufacturing.
Borrelli says it's difficult to make certain goods in America. "The machinery is just not as good here. The quality would actually go down in the U.S. by a pretty large margin," Borrelli said. "A lot of people don't understand that, that the machinery is like, you know, 1980s versus in China it's almost five times faster."
Rohit Arora, CEO and founder of small-business lending platform Biz2Credit, emphasized the difficulty of moving production to the U.S. "We cannot expect them to become manufacturers because that's not going to happen," Arora said. "You know, first of all, any kind of reshoring of many factories will take time. Secondly, it requires a lot of trained workforce."
Trump Tariffs And New Trade Opportunities
Despite the headwinds, some see potential long-term benefits. Arora suggested that if the U.S. can negotiate favorable tariff deals with other countries, it could open up more opportunities for American companies.
"One good outcome out of all this could be that if Trump is able to get a lot of countries to do zero tariffs, then that's actually very good for world trade," Arora said. "And that is also very good for American companies."
For now, small-business owners continue to navigate the turbulent economic landscape, hoping for clarity and relief soon.
Arora said the current climate may mark the start of a new reality for businesses. "As a business owner, one needs to now start thinking about living in a more uncertain world," he said.
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