{"id":12848,"date":"2025-04-02T19:40:27","date_gmt":"2025-04-02T19:40:27","guid":{"rendered":"https:\/\/finderica.com\/?p=12848"},"modified":"2025-04-02T19:40:27","modified_gmt":"2025-04-02T19:40:27","slug":"how-they-work-and-who-is-impacted","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=12848","title":{"rendered":"How They Work And Who Is Impacted"},"content":{"rendered":"\n
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A truck carrying vehicles prepares to cross into the U.S. from Canada at the Ambassador Bridge in … More<\/span> Windsor, Ontario. (Photo by Geoff Robins \/ AFP) (Photo by GEOFF ROBINS\/AFP via Getty Images)<\/span><\/p>\n

<\/fbs-accordion>AFP via Getty Images<\/small><\/figcaption><\/figure>\n

If you’re experiencing whiplash from the tariff announcements flying back and forth, you’re not alone\u2014especially if you’re a small business owner. On 17 of the past 72 days, the U.S. has either imposed new tariffs, faced retaliatory measures, or negotiated last-minute tariffs delays. With the White House now promoting today as \u201cliberation day\u201d and promising even more tariff actions, Main Street entrepreneurs are struggling to keep up with the dizzying pace of trade policy changes.<\/p>\n

Proponents of tariffs have said that opposition boils down to differences in political ideology, which likely causes many conservative economists to bristle. In fact, The Wall Street Journal<\/em>\u2019s editorial board called proposed 25% tariffs on Canada and Mexico \u201cThe Dumbest Trade War in History<\/u><\/a>.\u201d That said, there is a lot of information and opinions on tariffs circulating these days, so here is an overview of how they work and who could be impacted.<\/p>\n

A tariff is basically a tax established by a government on goods or services imported from another country. This tax is generally paid by the importer to the customs agency of the importing country. While they can be intended to raise revenue for the government or implemented to protect certain domestic industries, sellers\u2014unable or unwilling to absorb the increase\u2014generally tack the cost of tariffs onto the price of their products and consumers foot the bill.<\/p>\n

\u201cIf we get tariffs, we will pass those tariff costs back to the consumer,\u201d Philip Daniele, the CEO of AutoZone, said on an earnings call<\/u><\/a> in November.<\/p>\n

Tariffs can also catch small business owners flatfooted and force them to pass along costs. Consider this example: Your business builds radiators for refurbished automobiles, and you order 1,000 radiator supports at $35 apiece from overseas. Later, the U.S. imposes a 20% tariff on imports from that country. When you arrive to pick up your shipment, U.S. Customs demands an additional $7 per unit. As Covid-19 showed, small businesses typically operate with minimal cash reserves, so you’re forced to use a line of credit to cover this unexpected $7,000 expense. Your tight profit margins don’t allow you to absorb these extra costs, so you pass them along to your client along with the financing charges, adding $10 per unit. Your client, facing the same profit margin constraints, then passes an additional $15 along to the consumer.<\/p>\n

\u201cResearch has shown that consumers ultimately pay. Economists don\u2019t typically agree on all things, but if you ask me, \u2018What is one thing they do agree on?\u2019, it\u2019s that tariffs are costly to the American consumer in the end,\u201d said Brown University Professor of Economics \u015eebnem Kalemli-\u00d6zcan, PhD, MA, who added<\/u><\/a> that \u201cAmerican consumers will pay the price, and they are also going to hurt American businesses.\u201d<\/p>\n

One individual who is often cited for his use of tariffs is President William McKinley, who was a champion of them in the 19th Century when they were a larger part of how the U.S. collected its revenue. However, as McKinley biographer Karl Rove noted<\/u><\/a>, \u201cMcKinley presided over Washington in a very different time. Federal spending in 1900\u2014the year of his presidential re-election\u2014was 3% of gross domestic product. Last year, federal outlays were 23% of GDP. It would be impossible to rely on tariffs on nearly $3.3 trillion in foreign imports to fund last year\u2019s more than $6.8 trillion federal budget.\u201d<\/p>\n

\u201cTariffs in McKinley\u2019s time had long been a budgetary staple. From 1863 to 1913, they brought in 49% of federal revenue, and much of the rest came from excise taxes on tobacco and liquor. In 2024, 48% of revenue came from personal income taxes, 36% from Social Security and Medicare taxes, and 10% from corporate taxes. Only 1.9% came from tariffs,\u201d Rove added.<\/p>\n

There are more anecdotal stories circulating every day on how tariffs can or are already impacting business owners. Earlier this year, Visa Business and Economic Insights issued its U.S. Regional Economic Outlook report<\/u><\/a>, which projected that Midwestern and Southern states will be the most severely affected by tariffs.<\/p>\n

\u201cWith high demand for both steel and aluminum in the manufacturing sector, we expect that the Midwest and South will be more negatively impacted by the new tariffs,\u201d the report stated. \u201cConversely, the West will likely be relatively less directly impacted. However, we expect the tariffs to lead to downstream cost increases, particularly for new autos, which we expect to hurt demand across all regions and translate into slower consumer spending growth.\u201d<\/p>\n

Tariffs also have the potential to cause serious economic issues beyond raising the costs of goods and services. The U.S. Chamber of Commerce\u2019s Small Business Index<\/u><\/a> for the first quarter of 2025 shows that small business owners\u2019 confidence has fallen seven points, a potential indicator of concern over tariffs. In addition, entrepreneurs on Main Street are also stating that they are worried about the uncertainty surrounding tariffs. A survey<\/u><\/a> of small business owners conducted in March found that 72% of owners agree that the rapid announcements, implementations, and postponements of tariff policies that we have seen this year have created a \u201cwhiplash effect\u201d that makes it nearly impossible for small businesses to plan effectively.<\/p>\n

This economic uncertainty has already forced 51% of small business owners to put critical business decisions on hold until trade policies become more stable and predictable. The consequences are severe and immediate \u2014 one in three small businesses are delaying expansion, canceling hiring plans, and holding more cash reserves than usual as defensive measures against this unpredictable tariff landscape. When Main Street entrepreneurs\u2014who employ nearly half of all Americans and operate in every community across the country\u2014are forced to freeze hiring, delay expansion, and reduce inventory as protective measures, the ripple effects touch every corner of the economy, potentially stalling growth and job creation nationwide.<\/p>\n

Another major uncertainty caused by tariffs is the full extent of the retaliatory measures other countries will take, but it is quite possible that they will be directed towards specific American consumers. David Ignatius recently reported<\/u><\/a> in The Washington Post<\/em>, \u201cJapan and the European Union are preparing lists of retaliatory tariffs that would increase the pain and financial dislocation for the U.S. Foreign diplomats wouldn\u2019t share details with me, but they appear to agree that the most effective approach would be to target \u2018red\u2019 states where Trump\u2019s support is strong.\u201d<\/p>\n

As tariffs continue to be implemented at the discretion of the president, their impacts cascade through our economy with consequences that extend far beyond customs invoices. For small business owners caught in this policy crossfire, the costs may include not just higher prices, but the paralysis of planning in an environment where the rules might change tomorrow. Until our national conversation on tariffs acknowledges both their immediate revenue implications and their chilling effect on business confidence and investment, Main Street entrepreneurs will continue paying the price for this economic uncertainty\u2014one delayed expansion and canceled hiring plan at a time.<\/p>\n<\/div>\n

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A truck carrying vehicles prepares to cross into the U.S. from Canada at the Ambassador Bridge in … More Windsor, Ontario. (Photo by Geoff Robins \/ AFP) (Photo by GEOFF ROBINS\/AFP via Getty Images) AFP via Getty Images If you’re experiencing whiplash from the tariff announcements flying back and forth, you’re not alone\u2014especially if you’re<\/p>\n","protected":false},"author":1,"featured_media":12849,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[379,360],"class_list":{"0":"post-12848","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-impacted","9":"tag-work"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/12848","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12848"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/12848\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/12849"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12848"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12848"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12848"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}