Between rising inflation rates, economic uncertainty, and labor shortages, the implementation of President Donald Trump’s tariff plan, scheduled for today, could be a fatal blow to the lives of many small businesses.
Iowa City is home to several strong and thriving small businesses students and community members have helped to stay open. While there is not a lot of turnover for businesses in downtown Iowa City, locations like 110 S. Dubuque St. have frequently rotated ownership.
Small-business ownership has always been a risky business with half of these businesses destined to fail within their first year. In today’s economy, small-business owners must deal with inflation, skilled worker scarcity, and local competition.
I asked local-business owner Benito Ocampo Campos, who opened Beno’s Flowers and Gifts in 2018, if his business has been impacted by inflation since opening.
“Yes, some of the products are more expensive than what they used to be, and the shipping costs are getting higher,” Campos said. “We have some customers get upset by increasing prices, but we have to do it to survive.”
America’s current inflation rates have eased within the last year, but our economy will face a new battle thanks to the new administration. Trump’s tariff plans have dominated the news cycle for weeks with reporters arguing its implications. No matter these arguments, it is clear these tariffs will not be good for the economy, the American people, and especially not for small-business owners.
Tariffs will force company owners to pay more for imported goods and services that in turn will pressure them into raising their prices, which could shrink their consumer bases. These tariffs could also cause a major disruption to the global supply chain, making it that much more difficult for businesses to obtain the inventory they need.
I asked Lisa Edwards, co-owner and operator of Press Coffee, about the potential effects of this plan.
“Of course we will be affected,” Edwards said.
She explained to me that Press relies on imports from countries like Mexico, whose climate and environment are essential for the growth of coffee beans.
“So, we must look at our margins and adjust as needed,” she continued. “If businesses are focused on the guest and are transparent about why the prices are increasing, that will help … But when you don’t know what will happen day to day, long-term planning feels pointless.”
This is not just a problem for businesses that import goods but also businesses that export goods. Trump is making it next to impossible to come to an amicable trade agreement with countries across the globe.
Many tariffs already took effect on March 12, like the 25 percent U.S. tariff on steel and aluminum that led to a back-and-forth with the European Union, or EU. The EU responded to the tariff by threatening to put a 50 percent tariff on U.S. whiskey, with Trump then threatening that if they did so, he would put a 200 percent tariff on European spirits.
Trump’s tariff plan will increase the costs of imported goods for businesses across the U.S., meaning prices will also increase for customers. Many small businesses rely on their competitive prices compared to larger corporations, but these tariffs will close that gap.
Johnson County does have programs in place to protect the small businesses we love, but some of the grants and funding programs have specific stipulations.
For example, the Johnson County Underestimated Small Business Grants give funding to companies that were disproportionately affected by COVID-19 or have at least 50 percent ownership from women, members of the LGBTQ+ community, people with disabilities, or people of color.
While it’s a good thing Johnson County is taking notice of these underrepresented groups and helping their companies, all small-businesses will suffer under these tariffs, and something must be done about it.
It’s important for small business owners to be aware of how their companies may be impacted and to prepare accordingly. Strengthening their relationships with their current inventory suppliers, diversifying their supply chains, and investing in supply chain software and other helpful technologies could be the difference between closing their businesses and thriving for years to come.
As a consumer, I urge everyone to shop small and support their local businesses rather than big chains. Instead of going to Starbucks downtown for your morning coffee, try Daydrink, fix!, Kindred Coffee, or — my personal favorite — Press Coffee.
Shopping at local businesses like Beno’s Flowers and Gifts instead of large corporations allows you to support your fellow community members. Next time you’re walking down Iowa Avenue, I suggest you stop in and smell the flowers.