Nightmare on Main Street: Trump's trade war is hurting American small businesses

• Main Street businesses say they're feeling the impacts of Trump's tariff policies.
• Economists said small businesses are hit harder by tariffs than their large, corporate competitors.
• Small businesses said tariffs are cutting into profit margins and forcing them to raise prices.

Marc Bowker's shop, Alter Ego Comics, has been a staple on North Main Street in downtown Lima, Ohio, for 16 years.

The shop sells comics and collectibles and frequently hosts community events, including an annual free comic book day, where they give away thousands of comics.

But now Bowker says he doesn't know what Monday will bring, given the whiplash of President Donald Trump's tariff policy.

He said suppliers are charging him as much as 34% more as a direct result of tariffs, some of which he's had to pass down to his customers.

"If you see prices go up at your local small business, it's not because we want to," he told Business Insider. "It's because we're forced to."

About 70% of Alter Ego's revenue comes from high-end collectibles based on characters from brands like Star Wars, Marvel, DC Comics, and Disney. Those products are made in China, which has been hit with up to a 245% tariff rate for some goods. Bowker said his profit margins have been slashed in half on many items, including some that were pre-ordered months ago.

"The tariff is not being paid by the Chinese government, the tariff is being paid by the American consumer and the American small business, and the American company paying to have the product manufactured in China," he said.

Small business owners and retail experts told BI that smaller businesses are being hit hard by tariffs. Meanwhile, bigger, corporate counterparts are better positioned to weather the storm.

Trump has framed his economic policy as explicitly for middle America. "President for Main Street, Not Wall Street," the White House touted on an online recap of Trump's speech earlier this month after his tariff policy sent financial markets tanking and businesses around the world scrambling.

Businesses on America's main streets are feeling the impact of Trump's trade war.

Many independent retailers — some of which have been longtime fixtures in their towns — are struggling to adapt to the tariffs, especially the steep tariff placed on goods from China. Think bridal stores, toy stores, coffee shops, specialty food and beverage stores, and importers.

"It's all devastating, but small businesses have a worse ability to manage it," Wayne Winegarden, an economist at the Pacific Research Institute, a free-market think tank, told BI. "This is not pro-Main Street, this is anti-Main Street."

"The larger companies are in a better position to absorb some of the costs," said Winegarden. "They have probably more fat that they can cut than small businesses. Small businesses operate in lower margins, so they can't really absorb it as easily."

The White House did not respond to a request for comment.

Winegarden said a lot of small businesses are family-owned, and are the classic example of how Americans climb the economic ladder to middle class, upper middle class, and beyond.

"These tariffs just cut off rungs," he said.

Trump has said Americans could feel "short-term" pain as a result of tariffs, but experts said that pain may not be short-term for everyone, and that it's the small businesses that will go out of business first.

"It's temporary for Starbucks. They will withstand it," Winegarden said, adding, "But if it's a year, that's probably too long for a lot of small businesses, and that's permanent pain."

Why small businesses struggle more with tariffs

Jason Miller, a Michigan State University professor and expert in supply chain management, told BI there were several factors that make tariffs harder for small businesses. For one, their cash flow is more limited, meaning they aren't necessarily able to pay a tariff for a product that they won't actually sell until some point in the future, sometimes months later.

Small retailers are also less likely to source directly from vendors and instead rely on an intermediary like a wholesaler or importer. That gives them far less leverage to negotiate prices on their goods.

"They're in a take it or leave it situation," Miller said.

In contrast, a huge buyer like Walmart has a lot more options and negotiating power to get better deals on the products they sell.

Miller said toy stores stand out to him as a sector of small businesses that could be especially hard hit by the tariffs on China, where 80% of all toy imports to the US come from.

Owners of independent, brick-and-mortar bridal shops, a common fixture on main streets, previously told BI they are also being hit hard, as a majority of wedding dresses sold in the US come from China.

In contrast, David's Bridal CEO Kelly Cook said the company, which is the largest bridal retailer in the US, was more tariff-resilient thanks to its larger and more varied supply chain and production.

Peter Cohan, associate professor of management at Babson College, told BI that the pain small players on Main Street are feeling would likely exacerbate the existing trends toward market concentration, with cascading effects on prices, innovation, employment, and economic inequality.

"Small retailers employ nearly half of all US private-sector workers. Their decline would eliminate jobs disproportionately in local communities," said Cohan. "Concentrated employers can suppress wages. Retail giants like Walmart have been linked to lower wages in local labor markets."

Cohan added that the tariffs could push out local retailers and allow large corporates to expand unchecked, which hurts competition for consumers and workers. Walmart's rapid expansion between 1990 and 2010 was often associated with the decline of local retailers within the same region, and Amazon's rise is similarly associated with the reduction of local bookstores, which diminished diversity in the publishing industry.

"Dominant retailers use their buying power to demand lower prices from suppliers, but these savings are rarely passed to consumers. Instead, suppliers may cut quality or reduce wages to meet demands," said Cohan. "Profits would concentrate among shareholders of large firms, worsening wealth gaps."

Importers directly serving retailers are struggling, too

When Trump announced widespread tariffs on April 2, Victor Schwartz and his daughter Chloe Schwartz, who owns and runs VOS Selections, a specialty wine and spirits importing company based in New York, spent the next two days in an intense math marathon trying to figure out how to re-price their products — and which ones to give up.

A week later, Trump decided to pause so-called reciprocal tariffs on most trading partners for 90 days but left a 10% baseline rate in place, and the Schwartzs' efforts immediately disappeared into the wind.

"We're in that position of having to make firm decisions about what our pricing was going to be under very uncertain situations," Victor Schwartz told BI. "This means we have to be much tighter in our inventory. We had to reduce some orders where we could, we stopped some orders where we could, we didn't move forward on new projects or we delayed them."

Despite being a small, owner-operated company of just 19 employees, VOS Selections handles around 600 products from 350 different producers around the world. Its vast portfolio used to be a merit, yet under constantly changing tariff rates, it became more of a nightmare.

Alcohol is a heavily regulated product, and regulations mandate that importers report their prices at least one month ahead of time before anything reaches retailers — prices importers cannot change later. For Schwartz, this means deciding prices for May in March, leaving room for supplier negotiations, shipping delays, and port processing. Any surprise expenses in this process, such as a sudden change in tariffs, would spell disaster for a small business with limited cash flow.

But surprise expenses aren't the only concern, said Schwartz. Retail stores and restaurants that buy wines from him haven't been doing well in the first quarter under dampened consumer sentiments and other tariff-associated costs, which he said caused his business to be down 16% in comparison to the first quarter in 2024.

"If a restaurant has a $20 price point for their white wine, and I can no longer offer it at $20, they're going to buy something else, and I'll lose that business," said Schwartz. "The customer that was paying $20, they're not going to say 'yes, we really liked that wine, so we're willing to pay $24 for it.'"

"There is an inflexibility in pricing in terms of what the customer is looking for," he added.

Schwartz's business is now the lead plaintiff in the broadest lawsuit yet against Trump's use of the International Emergency Economic Powers Act to impose tariffs, which no prior president has done. The lawsuit argues that Trump's use of the IEEPA to completely bypass Congress violates constitutional limits on executive power, and that a decadelong trade deficit does not meet the "unusual and extraordinary threat" criteria in the Act.

As of April 18, the Liberty Justice Center, a Libertarian legal group that is representing this lawsuit in court, has filed an application with the US Court of International Trade for a temporary restraining order to suspend Trump's tariffs.

Winegarden, from the Pacific Research Institute, said he is concerned that the tariffs would do what COVID did to small businesses. Where Winegarden lived in New York, the storefronts that closed down during the pandemic have remained shuttered for years.

"Everyone talks about small businesses, right? They're the heroes," Winegarden said. "Everyone liked small businesses, so it's just so ironic. Why are we implementing policies that punish them in particular?"

Do you have a story to share about how tariffs are affecting your small business? Contact these reporters at kvlamis@businessinsider.com or katherineli@businessinsider.com.