Tariff Volatility: The Real Threat to U.S. Small Business Growth

Tariffs Disrupting Planning More Than Pricing

When tariffs dominate headlines, most of the conversation focuses on price: who will absorb the cost, how much consumers will pay, and whether the policy is inflationary. But for America’s small businesses, price increases are only part of the equation. The greater risk is volatility. And volatility directly undermines a small business's ability to plan, hire, and grow.

While multinational corporations may have the scale, resources, and global infrastructure to navigate trade policy swings, small manufacturers operate under very different conditions. We are fully exposed to policy shifts without the buffers or political leverage that larger firms often enjoy.

The Central Challenge: Instability

Over the past six months, U.S. trade policy has undergone constant and disruptive change. Following multiple rounds of new tariffs, temporary reprieves, and subsequent escalations, small businesses have had to adjust to:

• A sweeping 10% baseline tariff applied to virtually all global imports under Executive Order 14257.
• Chinese import tariffs that surged as high as 145%, before temporarily retreating to 30%, only to settle at a newly proposed long-term rate of 55% (BBC).
• Steel and aluminum tariffs that have doubled to 50%, with little advance notice or ability for businesses to prepare (BBC).

Each policy change creates a new wave of operational challenges. For businesses that rely on raw materials, engineered subcomponents, or globally integrated supply chains, these shifts hit immediately and directly. Supplier contracts must be renegotiated, landed costs recalculated, production schedules adjusted, and entire product pipelines delayed.

Tariff Volatility Paralyzes Long-Term Growth

Small businesses thrive when they can make long-term investments: in capital equipment, workforce expansion, product development, and strategic partnerships. When tariff rates shift repeatedly in six-month cycles, confidence in long-term decision-making erodes.

Small manufacturers cannot invest in tooling for new products if material costs fluctuate with no predictability. Retail buyers hesitate to commit to new programs when landed costs may change mid-contract. Federal procurement partners require long-term fixed pricing that becomes increasingly difficult to offer under unstable trade conditions.

The result isn’t just delayed growth. It is widespread paralysis in sectors that depend on consistency to scale.

Exemptions and Loopholes Disproportionately Benefit Larger Players

While small businesses remain fully exposed to every tariff change, many large corporations have successfully secured carve-outs or exemptions. In April 2025, companies like Apple, Nvidia, and Dell were granted exemptions from reciprocal tariffs covering smartphones, semiconductors, and other electronics (Reuters).

At the same time, foreign exporters continue to exploit transshipment routes, rerouting Chinese-origin goods through countries like Vietnam, Thailand, and Malaysia to sidestep U.S. tariffs (Yahoo Finance).

Even before recent enforcement actions, the de minimis loophole allowed hundreds of millions of shipments under $800 to enter the U.S. duty-free. In 2024 alone, U.S. Customs processed more than 1.3 billion such shipments, primarily benefiting overseas sellers who were able to bypass both tariffs and inspection regimes (CNBC).

In effect, small U.S. manufacturers that comply with safety, labor, and trade regulations are operating at a systemic disadvantage compared to global competitors who exploit policy gaps.

A Case Study: The Impact on U.S. Small Manufacturers

GenTent Safety Canopies is just one example of the real-world impact. Since April 2025, our input costs have surged dramatically:

• Flame-retardant nylon (159% increase since April 2nd declarations).
• Aluminum tubing (72.9% increase since April 2nd declarations).
• Steel jaw clamps (72.9% increase since April 2nd declarations).
• EPDM flame-retardant rubber (12.7% increase since April 2nd declarations).
• NFPA 701 marine grade vinyl (157.6% increase since April 2nd declarations).

The details of these tariff effects, and the threat they pose to our business, were shared with our delegates and staff in April and May of this year, and outlined in our report:

Our experience is not unique. It reflects the broader reality that small manufacturers nationwide are now navigating daily.

A Structural Policy Imbalance

As outlined in J.P. Morgan’s 2025 Global Trade Outlook, small businesses are absorbing a disproportionate share of trade-related costs. Lacking the scale to shift production or navigate exemption processes, small enterprises face rising input costs, shrinking price ceilings, and mounting pressure that favors scale over compliance or quality. Where larger corporations have the depth to absorb or pass margin increases to their consumers, small businesses may be unable to absorb the average effective tariff rate increase, which is projected to eventually settle around 15-18%. 

Uncertainty from unpredictable tariffs creates instability across the entire economy. As global trade tensions escalate, new projections estimate U.S. GDP could shrink by 1% by 2026, largely driven by weakened business confidence and hesitation to invest.

Source: JPMorgan Research

This Problem is Earning National Attention

Congressman Chris Pappas visited the GenTent Brentwood, New Hampshire facility to hear firsthand how tariff volatility affects not only GenTent but small businesses statewide. WMUR captured the visit, highlighting how unstable trade policy makes long-term planning nearly impossible for small manufacturers.

Following the on site visit Mark Carpenter, GenTent founder, was one of seven small business owners invited to speak at a press conference with Congressman Pappas and Representative Kelly Morrison (MN‑03) announcing the House version of the Small Business Liberation Act. The bill proposes exempting all small businesses from the tariffs imposed under Executive Order 14257.

Congressman Pappas and Congresswoman Morrison officially introduced the House bill. This complements Senate companion legislation (S.1593), introduced by Senators Schumer, Markey, and Hirono earlier this year.

Tariff Policy Is Killing Innovation

As recently reported by Associated Press, small product companies are pausing research and development; and opting to shelve new product rollouts due to unpredictable tariff costs; citing the peaks as high as 145%.

According to economists, when senior leadership is forced to manage policy volatility rather than product innovation, long-term competitiveness suffers; an issue that is overtly playing out across the entire small business sector.

The Policy Solution: Predictability

What small businesses need most is not protectionism or special exemptions. We need stability.

Trade policy must reward compliance with U.S. labor, safety, and procurement standards. It must allow businesses to confidently invest for the long term, without fear of quarterly policy reversals.

When policy fluctuates, small businesses pause investment, hiring slows, and growth stalls. That instability becomes systemic drag on American manufacturing as a whole.

If policymakers want to rebuild U.S. supply chains and small business capacity, predictability must become the foundation of trade policy.

Brian Thomas is Director of Sales and Marketing at GenTent Safety Canopies, LLC, based in Brentwood, New Hampshire.