Sun, 02 Feb 2025

'Is it for a day or four years?' Tariff uncertainty spooks small businesses

Entrepreneurs in the US, Mexico and Canada worry that even a short trade war could push up prices and cost jobs.
Donald Trump's decision to impose new tariffs on imports from America's top trading partners, Mexico and Canada, has sparked uncertainty among business owners. The 25% tax on shipments from these countries will affect around 40% of the US' $3 trillion annual imports. Canadian oil and other "energy resources" will face a lower 10% tariff, but otherwise there will be no exceptions, according to the White House. Trump claims the tariffs are intended to hold Canada and Mexico accountable for promises to address illegal immigration and drug trafficking. The tariffs will go into effect on February 4th and remain in place until the crisis is alleviated. The move has been met with concern from business owners, especially those in North America who have become tightly linked economically through free trade agreements. Businesses that import spirits from Mexico are particularly worried as prices could increase significantly due to the tariffs. Nicolas Palazzi, founder of PM Spirits, said that the 25% tax on mezcal and tequila imports would be devastating for his business. Economists predict that the tariffs will have a significant impact on the economies of Mexico and Canada, potentially pushing them into recession. Canadian businesses are also bracing themselves for retaliation from the US. The president has dismissed concerns about the economic impact of the tariffs, but analysts warn that they will weigh on growth, raise prices, and cost jobs - an estimated 286,000 according to the Tax Foundation. Smaller firms who have less financial cushion will bear the brunt of the disruption. California-based importer Ben Scott said he was "pretty frustrated" by the decision and worried about the impact on his business. Fred Sanchez, owner of Bad Hombre Importing, is contemplating selling off his stock of liquor and possibly shutting down due to the potential costs of the tariffs. He believes that Trump may be using tariffs as a negotiating tactic and that the tax could be short-lived.
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