A number of small American businesses are facing growing challenges as a result of the tariff policies initiated during Donald Trump’s administration, highlighting the complex effects of trade regulations on smaller-scale importers. One illustrative example involves a fictional small business owner named Hank, a retired machinist from Indiana who imports tabletop war-gaming figures from China, modifies them domestically, sends them to Spain for painting, and then re-imports them for sale.
Under previous trade rules, Hank benefited from the “de minimis” exemption, which allows parcels valued below $800 to enter the United States without tariffs. However, starting in May 2025, the Trump administration eliminated the de minimis exemption for imports from China, and by August it extended the removal to imports from all countries. This policy adjustment was aimed primarily at limiting direct-to-consumer sales by Chinese companies like Temu and Shein, whose profits reportedly declined sharply following the change.
Despite the intended impact on large foreign sellers, this shift has also created unintended difficulties for smaller operators like Hank. The tariff classification of goods returning from alteration abroad has become complicated. Depending on whether customs treats the re-imported figurines as originating from China or newly originating from Spain—where the alteration occurred—Hank may face tariffs on the entire value of the goods or only on the additional value added abroad.
Moreover, new Customs and Border Protection rules on “goods for repair or alteration” impose complex procedural requirements. These include detailed declarations requiring signatures from importers and alteration companies and the risk that goods could be classified as incomplete and subject to full tariffs. This bureaucratic burden has led some small operators to consider abandoning their businesses. Hank, for example, reportedly plans to switch his political support ahead of the November elections, reflecting broader dissatisfaction.
The removal of de minimis and the introduction of increased paperwork are intended to tackle issues like mislabelling of goods’ origins, a problem the administration itself acknowledges it created. However, experts express skepticism about the effectiveness of these measures given the existing overload experienced by customs authorities and trade compliance systems.
Trade analysts emphasize that the cumulative effect of tariffs and regulatory complexity favors larger multinational companies, which have greater resources to manage compliance and adjust supply chains. Larger firms already dominate about two-thirds of U.S. goods exports by value and report significant difficulties in handling the growing administrative load. By contrast, small and medium-sized enterprises often lack the capacity to navigate the evolving trade environment, despite preferential trade agreements nominally aiming to support them.
Research on the consequences of earlier tariff rounds found that many Chinese exports were rerouted through third countries, with multinationals adjusting their affiliate networks to mitigate disruptions. Meanwhile, domestic small businesses experienced the full brunt of these shocks with less ability to adapt.
As the U.S. administration pursues further measures to tighten origin verification, the debate continues about how to balance trade enforcement with the practical realities faced by small American business owners operating within increasingly complex global supply chains.