Tariffs Add to ‘Unprecedented’ Pressures Facing Small Businesses

American small businesses are weathering a storm brought on by leadership changes in Washington.

As The New York Times (NYT) reported Sunday (April 6), these changes include stalled funding, job cuts at federal agencies, a crackdown on immigration and now, tariffs. Put together, it has left business owners unclear on how to move forward.

“It’s feeling like a tornado to small business owners,” said Natalie Madeira Cofield, CEO of the Association for Enterprise Opportunity, which backs efforts to help companies with under 10 employees. “This is an unprecedented moment.”

The report pointed out the pressures this sector has been dealing with in recent years, including the COVID pandemic, a jump in inflation, and rising interest rates.

Smaller businesses now have fewer employees on average than they did prior to the pandemic, NYT said, citing data from payroll platform Homebase, with hiring down 1.6% during the first quarter compared to the same period in 2024.

Meanwhile, data from Quickbooks shows that the number of businesses with fewer than 10 employees began to rapidly contract beginning last March.

The report also cited research from Ufuk Akcigit, a University of Chicago economist, showing that small businesses began to run up credit card bills in 2021, taking on steep interest payments. When interest rates climbed in 2022, revenues fell and more small businesses slipped into delinquency.

“Small businesses don’t have internal capital to rely on,” Akcigit said. “As a result, if there’s any financial difficulty, they’re the first group to be left out of the credit market.”

Meanwhile, forthcoming research from PYMNTS Intelligence shows the financing pressures facing small and medium-sized businesses (SMBs).

“The findings reveal that about half of SMBs rely on immediate sales or existing cash for survival, with business credit cards — which are not a working capital solution — being the most common form of financing for those with access,” PYMNTS wrote recently.

“SMBs with access to some method of financing demonstrate greater confidence in navigating economic challenges.”

The challenges extend to middle-market companies where — per additional PYMNTS Intelligence research — 60% of CFOs expect the tariffs to bring about additional economic uncertainty and planning challenges.

The research also found that almost 70% of finance chiefs foresee supply shortages and product delays, with a similar share executing new costs to restructure their supply chains.

“While uncertainty reigns, one thing may remain clear: The firms that survive could be the ones willing to evolve. CFOs today need to be part economist, part strategist, and part fortune teller, able to anticipate policy shifts while managing immediate operational challenges,” PYMNTS wrote last month.