China tariffs squeeze small businesses

NEW YORK (AP) — Major orders canceled. Containers of products left stranded overseas. No roadmap for what comes next.

The Trump administration raised tariffs on goods from China to 145% in early April. Since then, small business owners who depend on imports from China to survive have become increasingly desperate as they eye dwindling inventory and skyrocketing invoices.

President Donald Trump seemed to back down somewhat last week when he said he expected the tariffs to come down “substantially.” That helped set off a rally in the stock market. But for small businesses that operate on razor-thin margins, the back and forth is causing massive upheaval. Some say they could be just months from going out of business altogether.

The Massachusetts family-owned game company

Game makers are particularly susceptible to the tariffs since the majority of games and toys sold in the U.S. are made in China, according to The Toy Association.

WS Game Co., based in Manchester-by-the-Sea, Massachusetts, is a family-owned business that licenses Hasbro board games like Monopoly, Candy Land and Scrabble and creates deluxe versions of them. Its most popular line of games come in boxes that look like vintage books and sell for $40.

The company’s games were featured in Oprah’s Favorite Things list in 2024 and sold in 14,000 stores in North America, from big national chains to mom-and-pop stores, said owner Jonathan Silva, whose father founded the company in 2000.

All of WS Game’s production is done in China. The tariffs have brought the past 25 years of healthy growth to a screeching halt.

Over the past three weeks, WS Game has had three containers of finished games, worth $500,000, stranded in China. It lost orders from three of the largest U.S. retailers totaling $16 million in business. And there’s not much Silva can do about it.

“As a small business, we don’t have the runway or the capabilities to move manufacturing on a whim,” said Silva, who has 22 employees. He said the tariffs have “disrupted our business and put us on the verge of insolvency” and estimates he has about a four-month runway to stay afloat if nothing changes.

“We’re really hoping that cooler heads prevail,” he said.

Artificial flowers in Kentucky

Jeremy Rice co-owns House, a home-décor shop in Lexington, Kentucky, that specializes in artificial flower arrangements for the home. About 90% of the flowers his business uses are made in China.

Rice uses dozens of vendors. The largest are absorbing some of the cost of the tariffs and passing on the rest. One vendor is raising prices by 20% and another 25%. But Rice is expecting smaller vendors to increase prices by much higher percentages.

House offers mid-range artificial flowers. A large hydrangea head will retail for $10 to $16, for example. China is the only place that manufacturers higher quality silk flowers. It would take a vendor years to open a factory in a different country or move production somewhere else, Rice said.

Rice ordered his holiday décor early this year. But even after stocking up ahead of the tariffs, he only has enough everyday floral inventory in to last two to three months.

“After that, I don’t know what we’re going to do,” he said.

Rice is concerned that the trade war will wipe out a bunch of mom-and-pop stores, similar to what happened in the Great Recession and the pandemic.

“There’s nowhere to turn, there’s nothing to do,” he said.

Tea in Michigan

A tea shop in a Michigan college town is also caught in the middle of the ongoing tariff fight.

“It’s basically just put a big pit in my stomach,” said Lisa McDonald, owner of TeaHaus, located in Ann Arbor, home to the University of Michigan. McDonald has owned TeaHaus for nearly 18 years and sells tea to customers across the U.S.

Americans drank about 86 billion servings of tea in 2024, according to the Tea Association of the U.S.A.. Almost all of that is imported since tea isn’t grown in the U.S. at scale, due to factors ranging from climate to cost.

McDonald imports loose-leaf tea from China, India, Kenya, Sri Lanka and other countries. She says her customer base is “from all over the U.S. and the world.” But she worries there is a limit to what they’ll spend. Her premium teas can cost up to $33 for a 50-gram bag.

“I don’t think I can charge $75 for a 50-gram bag of tea, no matter how amazing that tea is,” she said.

McDonald understands Trump’s rationale for wanting to use tariffs to spur U.S. manufacturing but says it doesn’t apply to the tea industry.

“We can’t grow tea in the U.S. to the extent that we need. We can’t just flip the industry and ‘make tea great again’ in America. It just can’t happen,” she said.

Car accessories in Oklahoma

Jim Umlauf’s business, 4Knines, based in Oklahoma City, makes vehicle seat covers and cargo liners for dog owners and others. To do so, he needs raw materials such as fabric, coatings and components from China.

Umlauf has explored manufacturing in countries other than China since 2018, when Trump first instituted a 25% tariff on goods from China, but has run into complications. In the meantime, 4Knines absorbs the extra cost, which Umlauf says has limited its growth and squeezed its margins.

Now, the new tariffs make it nearly impossible to do business. The demand is there, but the company can’t afford to bring over more products.

“We only have a limited amount of inventory left, and without some relief, we’ll run out soon,” Umlauf said.

As a small business owner who has worked hard to develop a high-quality brand, create jobs and contribute to the community, Umlauf is frustrated. He has tried to contact the White House and other decision-makers to ask for small business support. But he’s gotten zero response.

“It’s time for policymakers to consider the full impact of trade policies not just on stock prices or global competitiveness, but on the real people running small businesses,” he said.

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AP videojournalist Mike Householder in Detroit contributed to this report.