President Donald Trump holds an executive order about tariffs increase, flanked by U.S. Commerce Secretary Howard Lutnick, in the Oval Office of the White House in Washington, D.C., U.S., February 13, 2025.
Kevin Lamarque | Reuters
Fear of rising supply chain costs as a result of President Donald Trump’s new tariffs expected to be implemented Wednesday — “Liberation Day,” as Trump calls it — have small to medium-sized businesses turning down opportunities to expand their market share with too much economic uncertainty surrounding prices in the near future. On Tuesday, Trump said the tariffs plan is ready and the administration said the trade taxes will take effect “immediately.”
“This is heartbreaking,” said Anjali Bhargava, founder of Anjali’s Cup, which makes retail spice packages.
Bhargava’s Ayurveda-inspired turmeric and chai blends — made with spices sourced from Vietnam, Thailand, Africa, and South America; tea and peppercorn from India; safran from Afghanistan; and special retail tin packaging made in China — are sold through retailers including Whole Foods, and there is little room for major price changes.
“My margins are thin,” Bhargava said. “The people I’m working with, independent foreign farmers securing their 2024 spice harvest, these are spices not grown at the scale I need here in the United States.”
The threat of the global tariffs already have the small business owner rethinking plans for core marketing efforts. In June, the Specialty Food Association’s big event takes place, the SFA Summer Fancy Food Show, but Bhargava said she may not attend because the packaging she needs for products may no longer be available at a price that can be absorbed.
“I have bootstrapped with pivots, but this is so challenging, I am at a point with my business where I can finally put my foot on the gas but now I don’t know if it’s going to be feasible to keep the business going,” said Bhargava.
Anjali’s cup tins made in China
Anjali’s Cup
Four years ago, she moved manufacturing of her spice tins to China because of the cost and quality as she aimed for more market share from national retailers like Whole Foods, in addition to her online business. But tariffs that force her to create new domestic supply chains threaten growth. “I will have to reconsider my entire retail strategy because the packing cost is unsustainable,” Bhargava said. “Trying to compete on the retail shelf I have beautiful retail tins, and to order tins in the U.S., the cost would be double and at astronomical quantities.”
Bhargava said like countless other small business owners balancing quality and affordability on a knife’s edge, the proposed tariffs threaten not just her livelihood but the very essence of what makes the U.S. marketplace diverse, authentic, and innovative.
Bhargava said she has been trying to stock up on ingredients that go into the tins, within limits, but the impact of tariffs on her business affect many other companies at the same time. “I supply to coffee companies and other smaller companies. I have warehouses and trucking services that move my product. There are many parts within the world of food,” she said. “I have been lucky to get this far, but my business future feels so unpredictable because of the tariffs.”
Bruce Kaminstein, former owner and CEO of cleaning products company Casabella, and now an angel investor in consumer product companies, said tariffs can price companies like Bhargava’s out of business, which ultimately lowers consumer choice.
“We will lose innovation and essentially the American Dream,” said Kaminstein. “I saw this firsthand when I sold Casabella in other countries with a high tariff. There was less product choice for consumers.”
He said while he is in favor of a “level paying field” where U.S. brands can sell overseas “without tariff prejudice, there needs to be a scalpel approach in executing.”
“For some industries, you cannot source everything in the United States,” he said.
Supply chains already ‘tapped out’ say big food companies
Anjali’s Cup is just one example of many companies both large and small facing the new trade war at an economic moment when the ability to take more price is getting harder.
In a letter to the White House, the Consumer Brands Association, which represents approximately 90 iconic brands like Coca-Cola, McCormick Spices, and Clorox, wrote the “current one-size-fits-all approach for protecting domestic manufacturers” needs to be adjusted to reflect supply chain constraints, and the reality in commodity and import markets.
Tom Madrecki, vice president of campaigns and special projects for the Consumer Brands Association, said its member companies are the largest employer in the domestic manufacturing sector, but they can’t frontload products ahead of tariffs due to spoiling and seasonal demand trends in food.
Members include General Mills, Colgate-Palmolive, and Mondelez, and Madrecki said many are in favor of “America First” policy and manufacture products in rural parts of the country.
“No one is contesting that,” Madrecki said of the goal to have more domestic manufacturing. “The issue is supply chains are incredibly tapped out, costs are high, ingredient costs are high, there is continued grocery inflation, and consumers are concerned. There is no margin on these products,” he said. And he added that unlike the trade war during Trump’s first term, at a time in the economy when inflation was much lower and costs could be absorbed, “This time there is nowhere to absorb it. Prices will have to increase or U.S. manufacturers will bear the brunt.”
Canadian oats are a good example of a commodity market where tariffs will have a big impact on food staples. The grain is used in many cereals because there are not enough domestic oats to meet demand. Canada is the world’s largest producer and exporter of oats, and over 90% of the oats milled for food in the U.S. are sourced from Canada. Growing conditions are better in Canada, Madrecki said, and due to a decline in oat acreage in the U.S. that dates all the way back to the 1940s, there is no longer a viable system for growing, storing and transporting U.S. oats from farms to mills at the scale needed for the food industry.
Iowa’s economy will face a big hit from tariffs on Canadian oats.
“Two of the largest oat purchasers in the world are U.S. consumer product group companies that employ thousands of workers in Cedar Rapids, Iowa,” Madrecki said. “Both are dependent on oats from Canada to make their food products here.”
Trade and transportation costs will pile up
Nick Rakovsky, CEO of DataDocks, a global supply chain scheduling system scheduling system, said the economics of trade war and the cost impacts require analysis that goes beyond the importing of products from foreign countries.
“I don’t see just the topline number of the tariff,” said Rakovsky. “I am looking at the whole operation, the supply chain, and how everything can be affected. There is so much to consider when pivoting to a new supplier.”
Companies looking to change suppliers need to review the location of the new sourcing material and where the new suppliers are located, if they are near the same ports currently being used, any new local laws and regulations, business costs associated with special licenses, quality control, and even how the freight is packed.
“If labor opens the doors of the container and it is not packed the usual way because the supplier does it different than the previous supplier, it could take a longer time to unload,” Rakovsky said. “This costs more money. So even the way freight is unpacked needs to be considered. In the end, a company has to ask, does pivoting to mitigate the cost of tariffs save money?”
Consumer goods such as knives are now facing a double whammy of tariffs on foreign manufacturing and foreign steel.
Eunice Byun, who cofounded kitchen product company Material Kitchen seven years ago after a career at Goldman Sachs, sells her products online, and in retailers such as the Container Store, Bloomingdales and Saks. Material Kitchen’s knives are made in China, Korea, and India.
“With the Trump tariffs we have had to increase prices for our steak knives (set of 3) from $90 to $110,” said Byun. “We also have a new product out of Finland that could now be tariffed. This is something we had never planned for. We will now have to see how that impacts pricing.”
To mitigate the China tariffs, Byun was looking to move some production to Canada, but with the Trump trade war now brewing there has stopped that planning.
Byun said the biggest cloud of uncertainty for her business is inventory management. “As a growing company, you are one viral video away from your inventory being sold out. It’s the hardest thing to control. We are riding this wave and we need more clarification on what the tariffs are and when regions will be impacted.”
Over the short term, frontloading products is an option if the product has a shelf life. Over the long term, however, the duration of a tariff needs to be factored into every business.
Any tariffs implemented by Trump could be reversed by a subsequent administration. For example, President Biden lifted tariffs on steel and aluminum in October 2021. But the question of tariff duration is another issue that is leading industries to weigh the pros and cons of changing supply chains.
“It’s not like you just go get a new supplier and start working with them,” said Brian Farley, vice president at business intelligence firm Dun & Bradstreet. “Unless you have already nurtured an appropriate replacement relationship. Those things take time.”