Making Sense Of Tariffs For Business Owners

There’s been a lot of noise recently about tariffs—how they’re used, who they help, and who they hurt. For small business owners, navigating the conversation around tariffs can feel overwhelming. Are they just another tax? Are they good or bad? And more importantly, how do they impact your business?

Here’s the reality: tariffs are a tool. Like any tool, they can be used effectively or create unintended consequences. At their simplest, tariffs are taxes on imports or exports. They might aim to protect domestic industries, create leverage in trade negotiations, or level the playing field when another country subsidizes its exports. But while tariffs may be “pro-business” in theory, that doesn’t mean they’re necessarily “pro-your-business” and it is essential to understand the potential impacts, plan ahead, and position your business to adapt.

The Two Sides of Tariffs

To understand how tariffs might affect your business, let’s look at their dual purpose.

On one hand, tariffs can be protective. For example, if foreign companies are selling steel or lumber at artificially low prices due to government subsidies, tariffs can level the playing field, protecting U.S. manufacturers and workers. This kind of targeted use makes sense in industries critical to national security or long-term economic stability.

On the other hand, tariffs can create ripple effects throughout the economy. When the price of imported goods rises, so does the cost of doing business for companies that rely on those goods. For small businesses, this often translates into higher expenses, tighter margins, and tough decisions about whether to pass those costs on to your customers.

What Does This Mean for Your Business?

When tariffs hit the news, the knee-jerk reaction is often fear—will they disrupt supply chains? Raise costs? Slow the economy? But the answer is rarely that simple. Yes, tariffs can create challenges, but they also force businesses to think more strategically. For example, some industries may see opportunities to increase competitiveness locally, while others may need to rethink their sourcing or pricing strategies.

For small business owners, the key is understanding how tariffs specifically affect your business. A construction company that relies heavily on imported steel or lumber may face cost increases that directly impact its bottom line. A restaurant chain sourcing locally, however, might feel little to no impact. It’s about knowing where you stand. Tariffs—and the broader policies behind them—require business owners to be proactive, not reactive.

In today’s environment, where tariffs and economic policy shifts are becoming regular headlines, preparation is critical. Here’s what I advise:

Steps to Navigate Uncertainty

1. Stay Informed: Don’t wait until new tariffs are announced to understand how they might affect your business. Keep a pulse on developments that could impact your supply chain, pricing, or operations. Whether it’s steel, aluminum, or even agricultural goods, knowing the specifics is half the battle.
2. Plan for Contingencies: In times of uncertainty, I tell business owners to build flexibility into their plans. Contingency planning is vital. Ask yourself: If material costs rise by 10%, how will that affect my budget? If supply chains are disrupted, do I have alternative sources? Being prepared isn’t just smart—it’s a necessity.
3. Work with Partners Who Understand Your Needs: The importance of relationships cannot be overstated. Banks that take the time to understand your business and local market are invaluable. They can help you navigate the financial implications of tariffs, whether it’s securing working capital to absorb higher costs or structuring flexible loans. At ConnectOne, we believe in working with business owners to find solutions tailored to their unique challenges.
4. Focus on Your Core Strengths: While tariffs can disrupt markets, they can’t replace the fundamentals of good business. In times of uncertainty, lean into what you do best. Whether that’s customer service, innovation, or operational efficiency, doubling down on your strengths is the best way to maintain a competitive edge.

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Tariffs aren’t going away. They’re part of a broader economic toolkit that will continue to evolve as administrations and global trade policies shift. While they can introduce challenges, they also highlight the importance of adaptability. Small businesses, by their nature, are built to be nimble—and that’s an advantage in a world where change is constant.

Ultimately, while tariffs may feel like yet another external challenge, they’re also a reminder of the value of preparation and relationships. By staying informed, planning strategically, and leveraging strong partnerships, businesses can weather the storm and emerge stronger on the other side. Because at the end of the day, it’s not just about being pro-business—it’s about being pro-your business.