Tariffs take a toll on small businesses

Lisa Lane, a mother from New Jersey, had a smart idea that she turned into a popular product. She gained national exposure and built a successful business with her son, Jake Lane. But like many small business owners, her American dream is now under threat from the Donald Trump administration's steep tariffs. She says her business is in "survival mode".

Her product idea came when she was on a beach vacation with her family of 15 people and four dogs, constantly cleaning the shower and rinsing sandy paws. There was a lot of "backache" as she didn't have a handheld showerhead attachment and thought there must be a better way to carry out the cleaning tasks.

"If I could think of a way to just connect something quickly and easily to the showerhead and rinse the dog off or clean my shower — (then) that would be amazing," she thought, and the inspiration struck.

Without any background in manufacturing, she read books, conducted research, designed her product and eventually found factories in China to make her Rinseroo brand come true.

Her creativity and small business took off on Amazon and it was an immediate success. Later, she would appear on Shark Tank, a long-running US reality show where entrepreneurs present their ideas to five business titans and raise funds. Lane and her son secured an offer of $343,000 for 5 percent equity from Lori Greiner.

She was able to create more jobs in the US by hiring an accountant, a social media person, and so on. But she said her business has been struggling, especially after Trump set high tariffs on imported goods from China, which threatens to kill her business.

Lane isn't the only small business owner struggling with the tariffs. The US Chamber of Commerce sent a letter to Washington in late April explaining the struggles small business owners are going through, hoping for an exclusion from tariffs.

"The Chamber is hearing from small business owners every day who are seeing their ability to survive endangered by the recent increase in tariff rates," it writes. "Small businesses do not have the margin or capital reserves to sustain the increased tariffs, nor do they have the ability to quickly modify supply chain."

When Lane started her business in 2019, the tariffs were relatively low. At the peak of the trade war, the tariffs would cost her close to $150,000, when it used to cost $17,000 earlier. She said today she pays 30 percent tariffs, and she had to raise the prices of her products, varying from $1 to $4. The cost of doing that was a 15 percent sales drop.

"It won't be the business margins we had from last year," she said. Unfortunately, she said, customers are only willing to pay so much money for household items. That was the very reason she didn't choose a manufacturer in the US, as she would have to double the retail price and it just "wouldn't be worth it".

Research conducted by Data-Weave for Reuters shows a sharp rise in prices on Amazon of products made in China since the beginning of May, based on an analysis of 1,400 items. The categories with the largest price increases are home and furniture, and electronics, which saw price hikes of 3.5 percent and 3.1 percent, respectively. Reuters concludes that this is a sign that tariffs are beginning to affect US consumers.

Raising costs

Gennadiy Goldberg, head of US rates strategy at TD Securities, told CBS News that prices will likely go up as tariffs raise import costs. "We still think in the next few months we'll continue to see the impact of the new trade policies on price levels, and they should translate into higher inflation," said Goldberg.

When asked if she believes Trump's "America First" economic agenda is working, Lisa Lane said: "I don't think it's possible. We are just not set up to do it … Maybe some of the big companies, maybe the car manufacturers, will come. That's great if you can bring those back, but (for) the small businesspeople, it's going to be impossible. I don't see it ever happening.

"They (China) make an amazing product. They really do. You get a good factory. They are such hard workers, and you know, great communicators. It is just such a great relationship and not just me but so many small businesses rely on China to build the business," said Lane. "We are adding to the economy. We are adding jobs. This is important for America to keep this relationship."

Lane expressed her frustration at how the tariffs keep changing.

"I'm hoping it goes down. If it stays at 30 percent, I'm guessing we are going to have to survive …At least it's not 145 percent, that was truly the death of the business," she said.

Another small business owner, Iris Elizabeth, founder of a cosmetics company called IBlossom Organics, also expressed her frustration on Facebook. "This level of taxation is not just frustrating — it's damaging," she posted.

"We have to make sourcing decisions that keep us afloat. If manufacturing here were affordable and accessible, I'd do it in a heartbeat. But right now, choosing survival isn't anti-American — it's the only way I can keep building something that will create jobs and economic impact locally," Elizabeth said in response to someone who commented that she was "putting profits ahead of American workers".

Jake Lane, chief operating officer at Rinseroo, said: "When we raised our prices and the profits got eaten, we had to make adjustments elsewhere. We couldn't pay our social media person anymore. We had to shut down our advertisements. We had to lay off a bunch of clients we work with — so it didn't only affect us but everybody we work with as well."

According to the US Chamber of Commerce, more than 40 million US jobs depend on trade, and tariffs pose significant risks to US employment. "Protecting these jobs and multiplying them is imperative to drive greater economic growth and American prosperity," it said.

bilinlin@chinadailyusa.com