A recent national survey reveals that tariffs imposed last year have significantly impacted small businesses across the United States, prompting many to take on debt, access retirement savings, and increase prices to cope with rising costs. The survey, conducted by the grassroots organization We Pay the Tariffs, gathered responses from 241 small businesses in 40 states, including six in Illinois.
Among the Illinois businesses surveyed were Chicago-based yarn store Dropped Stitch, incense maker Genieco, and furniture seller Moderne Living. Yorkville-based sporting goods manufacturer Boombah reported delaying expansion plans, new product development, and freezing hiring in response to tariff-related pressures. Rae Muranski, chief operating officer of Moderne Living, emphasized the financial strain tariffs place on small companies: “Tariffs must often be paid up front, creating a significant cash flow burden. This ties up working capital long before customer payments are received, making it especially difficult for small businesses to fund operations, invest in growth and remain competitive.”
The findings come amid ongoing trade tensions, highlighted by President Donald Trump’s recent threat of 50% tariffs on most Canadian goods starting in August. Such measures risk exacerbating inflation rates and further straining U.S.-Canada economic relations. In addition, the U.S. announced it would impose tariffs ranging from 10% to 12.5% on imports from 60 countries accused of inadequate enforcement against forced labor in their supply chains.
According to the survey, 45% of small businesses took on new debt, and 40% withdrew personal savings, including retirement funds, to manage tariff-related costs. More than half of respondents (57%) reported declines in business over the past year, with four in five attributing these difficulties largely to tariffs. The survey also found that nearly 30% of businesses laid off employees, and 56% delayed or canceled investments and product launches. To offset added expenses, 83% raised their prices, while 85% experienced compressed profit margins.
Legal challenges have complicated the tariff landscape. Earlier this year, the U.S. Supreme Court ruled some of the Trump administration’s tariffs unconstitutional, and the U.S. Court of International Trade decided that companies affected by tariffs under the International Emergency Economic Powers Act may be eligible for refunds. However, the refund claims process can be cumbersome, demanding extensive documentation and incurring additional administrative costs that burden businesses further.
Many businesses view tariff refunds as critical to their survival. The survey shows that 27% of respondents plan to use refunds to prevent closures, while 53% intend to apply refunds toward repaying accumulated debt. Kelly Weinberger, founder of the Westmont-based jewelry company WorldFinds, noted in the report, “We’ve accumulated massive debt due to the tariffs, so if refunded, it would go to pay down that debt to help us remain in business.”
Individual businesses detailed their challenges: In May, Marla Showfer of the Winding Road gift shop in St. Charles applied for more than $18,000 in tariff refunds, receiving an initial refund of nearly $3,700 but still waiting on others, even as her business continues to pay 19% tariffs on imports from Indonesia. Meanwhile, Hannah Wilson of Dropped Stitch in Chicago reported paying nearly $1,500 in duties and fees by April, with additional cost increases from vendors reflected in wholesale prices.
The survey underscores the multidimensional impact tariffs have had on small businesses nationwide, highlighting concerns over cash flow, increased costs, and the ongoing uncertainty surrounding trade policy.