Small firms brace for punishing side effects of Trump’s tariffs

KATRINA GOLDEN, the owner of Lil Mama's Sweets & Treats, got an email this past spring from the Chinese company that supplies her branded paper coffee cups. Tariffs were coming, it said.

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If she placed a bulk order right away, she could lock in the price at the time of $225 a case.

“I would have loved to,” said Ms. Golden, whose coffee and cake shop operates out of a hospital in downtown Augusta, Georgia. But as a small-business owner, she didn’t have that kind of extra cash. “My bottom line wouldn’t allow me to.”

Across the country, American businesses, workers and families are trying to figure out how to navigate the economic waves stirred up by President Donald J. Trump’s tariff, tax and budget policies. For large firms with big bank balances, workers ensconced in a job and households near the top of the income ladder, the drastic policy shifts will be easier to manage.

But small-business owners like Ms. Golden as well as job seekers and households at the lower and middle rungs of the income ladder are in for a rougher ride.

Smaller firms, for instance, not only have fewer resources to weather unexpected costs, they also lack the bargaining power of megastores like Walmart to pressure suppliers to lower prices. They may also lack access to lines of credit available to bigger firms.

Nor can they afford long-term contracts that can keep costs down. Doug and Betsy Scheffel, owners of ETM Manufacturing, a custom sheet-metal fabrication and machine shop in Little-ton, Massachusetts, have to buy aluminum and steel on the spot market. Since 50% tariffs have been slapped on those imported metals, their costs have soared.

“I don’t know how to put a business plan together that makes any sense to anyone,” Mr. Scheffel said. Neither do Higher costs and unpredictability are rippling through the labor market.

“I would hire two more today if I knew that I could afford to keep them,” said Ms. Golden, who employs four people. But with whipsaw policy changes, “how do you plan?”