Survival or Surrender: Will Tariffs Force Small Businesses Off the Global Stage?

Small- to medium-sized businesses (SMBs) can be squeezed from a new direction each day.

Some of those squeezes are starting to hurt, particularly the U.S. tariffs on foreign trade.

As tariff regimes proliferate from Washington to Brussels to Beijing, SMBs are being forced to make tough choices. They need to find new ways to share, offset or avoid costs, or risk ceding the global marketplace to larger rivals. One question for many Main Street business owners is whether they can survive or if they must surrender.

For SMBs, tariffs aren’t just a line item; they’re an existential threat. Prices for goods and services climbed to their steepest rate in over a year this month, with tariffs fueling an especially sharp increase in prices of manufactured goods. SMBs account for around one-third of total imports to the United States.

Larger firms can diversify suppliers or negotiate bulk contracts. Most SMBs simply don’t have those levers. SMBs represent most of the U.S. economy, many in ways that are difficult to understand until their products are suddenly off the table due to supply chain and pricing pressures.

For example, gadget makers are warning there “will be no Christmas” if the tariffs on their imports from China continue. As for Amazon’s upcoming Prime Day event, many third-party retailers and smaller sellers are reportedly sitting out the shopping bonanza as the tariffs appear poised to make any promotional discounting untenable.

Bookings for standard-sized shipping containers traveling from China to the U.S. were down by 45% from a year ago, the Financial Times reported Sunday (April 27), citing logistics industry groups. The first container shipments from China to face Trump’s 145% tariffs are set to reach the U.S. this week.

If there’s a silver lining, it’s that technology is giving SMBs the new tools they need to adapt. However, the question that remains is whether, or how many, small U.S. businesses will be forced to retreat from global markets entirely to focus on domestic growth.

Read also: Too Many Small Businesses Now Bet Tomorrow’s Survival on Today’s Sales

A decade ago, an SMB might have spent days untangling customs paperwork. Now, a platform does it in minutes. That agility is what can help keep SMBs in the game.

The imposition of tariffs has catalyzed a digital procurement revolution, accelerating the adoption of automation, data analytics and embedded financial services.

Innovative, next-generation supply chain management platforms, once out of reach for SMBs, are now increasingly affordable and scalable. These systems can help them map their supplier networks, forecast tariff impacts and quickly model what-if scenarios.

But it’s not all smooth sailing ahead. According to the Federal Reserve Bank of Atlanta, SMBs are less likely than their larger counterparts to pass increased costs onto customers, leaving them more exposed to margin pressures when inflation or supply shocks hit. This dynamic underscores the role that new financing and payment solutions could play in helping SMBs navigate economic headwinds.

Priority CEO Tom Priore told PYMNTS this month that no matter the economic environment, SMBs are constantly forced to navigate seas of complexity. Bundled financial services can help them accelerate cash flow and optimize working capital.

“From the SMB standpoint, the exposure to tariffs at the supply chain level may actually be pretty small … but the main concern and the damage to small business lies with consumer uncertainty,” Priore said.

See also: How Payments Innovation Underpins All-Weather Businesses and Resilient Supply Chains

Nearly 1 in 5 SMBs are pessimistic about their odds of survival over the next five years, according to the PYMNTS Intelligence report “Brewing Storm: Why 1 in 5 Smaller Businesses Without Financing Fear They May Not Survive Tariffs.”

“We need high-growth businesses to survive and thrive [in this uncertain economy],” Lucy Demery, senior vice president and head of Visa Commercial Solutions, Europe, told PYMNTS in February, noting that embedded options are proving to be a “huge unlock for supply chain payments.”

Despite these efforts, not every SMB can adapt. Many are abandoning international sourcing altogether, turning instead to domestic suppliers — even at a higher cost.

But this tactic of reshoring is not always feasible. Many SMBs — especially those dealing in specialized goods or components — simply don’t have domestic alternatives. For others, switching suppliers means lengthy disruptions, costly compliance audits and the risk of losing product certifications.

SMBs are watching closely. Industry groups are lobbying for targeted relief — such as exemptions or delayed implementation for small businesses — but progress is slow. In the meantime, survival depends on adaptability.

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