In an increasingly global economy, the word “tariff” is more than just political jargon — it’s a critical concept that directly impacts small businesses. Whether you’re importing parts from overseas or exporting products to new markets, tariffs influence your costs, your pricing strategy, and your bottom line.
At Capital Express, we believe in empowering business owners with financial knowledge. In this comprehensive guide, we’ll break down what tariffs are, how they impact trade, and what small business owners can do to mitigate risks and maximize opportunities — with or without outside funding.
What Are Tariffs?
Tariffs are taxes imposed by a government on imported (and sometimes exported) goods. They are typically used to:
Protect domestic industries
Generate government revenue
Influence trade negotiations
Types of Tariffs:
Tariff Type
Description
Ad Valorem Tariff
Charged as a percentage of the value of the goods (e.g., 10% of $1,000)
Specific Tariff
Charged as a fixed fee per unit (e.g., $5 per imported bottle)
Tariff-Rate Quotas
Combination of both: low rate up to a certain volume, higher beyond that
Tariffs can impact businesses at multiple points in their supply chain. Understanding which type applies to your imports or exports is the first step in managing their effects.
How Tariffs Impact Small Businesses
Small businesses are especially vulnerable to tariff changes due to limited cash flow, fewer suppliers, and less bargaining power. A small import tax increase can lead to a domino effect:
Higher costs for goods
Tighter profit margins
Reduced competitiveness in the market
Example Scenario:
A local furniture retailer imports wooden components from Southeast Asia. A new 15% tariff on imported wood increases their production cost, forcing them to either:
Raise prices (potentially losing customers)
Absorb the cost (hurting profitability)
Strategies to Mitigate Tariff Risks
1. Diversify Your Supplier Base
Avoid being overly dependent on a single country or region. Explore domestic alternatives or source from countries with favorable trade agreements.
2. Use Tariff Engineering
Modify your product to qualify for a lower tariff rate or a different classification. This requires deep understanding of Harmonized Tariff Schedules (HTS).
3. Consider Third-Country Transit
Sometimes goods routed through other countries can reduce or avoid certain tariffs. Be sure to consult a business loan broker or trade expert before implementing this strategy.
4. Renegotiate with Suppliers
Work with your suppliers to share the burden of new tariffs or adjust your pricing terms.
Adapting to tariff changes may require additional capital — whether it’s for sourcing new suppliers, warehousing goods, or changing logistics. This is where Capital Express can help.
As a small business loan broker, we help you find:
Revenue-based funding
Working capital loans
Equipment financing
We work with trusted partners to ensure you get flexible, fast funding that aligns with your growth goals — without drowning in red tape.
Understanding Your Business Credit Score & Trade Financing
Did you know your business credit score affects your ability to finance inventory and manage tariff-related costs? A strong credit profile allows you to:
At Capital Express, we not only help you access funding — we guide you on improving your financial foundation.
Tools to Help You Monitor Tariff Changes
1. U.S. International Trade Commission (USITC)
Provides up-to-date info on U.S. tariffs and Harmonized Tariff Schedule.
2. Trade.gov
Managed by the Department of Commerce, it’s a valuable resource for export guidance and country-specific tariffs.
3. Customs Brokers
Working with a licensed customs broker can help you navigate complex tariffs and avoid costly errors.
Tariffs vs. Trade Agreements: A Double-Edged Sword
Tariffs don’t operate in isolation. They often result from — or lead to — trade agreements.
Aspect
Tariffs
Trade Agreements
Purpose
Restrict/Control trade
Facilitate trade
Imposed by
Single government
Multiple governments
Business Impact
Raises import/export costs
Reduces costs, opens markets
Small business owners should stay informed on trade negotiations, as new deals can eliminate certain tariffs or create new opportunities for expansion.
Real-World Case: How One Retailer Navigated Tariff Chaos
A clothing boutique in Texas sourced 80% of their fabrics from China. When tariffs spiked, their margins dropped drastically. Their response:
Switched suppliers to Vietnam and Mexico
Used an emergency working capital loan from Capital Express
Maintained profitability while keeping prices competitive
Using Business Loans to Hedge Against Global Uncertainty
Tariffs are part of broader global shifts — pandemics, wars, shipping disruptions — that can upend your supply chain. Preparing for volatility is smart business. Here’s how Capital Express supports that:
No, they can also affect exports, especially if another country retaliates with its own tariffs.
Q2: Can I avoid tariffs completely?
Only by sourcing domestically or using trade agreements that eliminate them.
Q3: Will tariffs change in 2025?
Tariffs often shift with new administrations or global events. Stay informed and flexible.
Final Thoughts: Be Proactive, Not Reactive
Tariffs are unavoidable for many industries, but they don’t have to cripple your business. With the right planning, smart funding, and support from Capital Express, you can adapt and thrive.
Our team of expert funding advisors and small business loan brokers will help you find custom solutions — whether you’re managing tariff costs, expanding operations, or planning for long-term resilience.
