A year after ‘Liberation Day,’ Trump’s tariffs are hurting small businesses : NPR
Paulina Gamino of Misfit Toys says new toys the store once would have sold for $25 are now selling for $45 because of tariffs, forcing them to cut orders.
Andrew Schneider/Houston Public Media
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Andrew Schneider/Houston Public Media
HOUSTON – A year after President Trump issued an executive order imposing high tariffs on most of the United States’ major trading partners, small business owners across the country say they are hurting.
Emergency tariffs imposed by Trump last year cost U.S. businesses $151 billion in the year that ended in February, according to an analysis of the most recent Census Bureau business data by the small business advocacy group We Pay the Tariffs.
In the Decree of April 2025Trump said the tariffs were necessary to protect “American businesses and workers.”
The Supreme Court has since ruled that the tariffs, levied under the International Emergency Economic Powers Act (IEEPA), were being applied illegally. The US Court of International Trade ruled that they should be refunded to the companies that collected them.
Despite his promises, the administration has yet to issue any refunds, and Trump has imposed new tariffs — on steel, aluminum and pharmaceuticals — to replace those that the courts overturned.
Luis Torres, senior business economist at the Federal Reserve Bank of Dallas, said, “You can see these comments about how these costs, these tariffs, you know, have had an impact on them, leading to higher sales prices, margin losses, and the uncertainty around them.” »
Prices and uncertainty
Misfit Toys, based in Houston, is a great example of a small business struggling with higher prices and the uncertainty associated with tariffs.
Located just off a busy highway in Houston’s Heights neighborhood, the store has built its clientele on trading vintage toys.
“I would say 70 to 80 percent of the products that come into the store are used items, owned by other people. And that’s what people are looking for, older items,” said store owner Daniel Rivera. “But that will never be enough to attract people to a retail store, if we don’t also have some of the latest, hottest items.”
To attract customers, Rivera said Misfit Toys still relies on sales of new toys tied to summer blockbuster movies and Christmas sales.
These new toys are largely produced in China and Japan. Since President Trump’s tariffs took effect a year ago, Rivera says he hasn’t been able to afford supplies for either season.
“The big box stores will do well,” Rivera said. “People go to Target, also for soap and, you know, for drinks and food. And while they’re there, the kids grab a toy. But here, we’re not going to get any of that summer action, any of that money. And we’ll definitely see that. [on] Christmas.”
Rivera’s wife and director of business operations, Paulina Gamino, says Misfit Toys can’t afford to absorb the full cost of tariffs like competitors like Target, Walmart and Amazon can.
Raising prices is their only alternative for what Gamino calls “mom-and-pop” stores.
“And so now we’re talking about brand new toys that maybe would have been $25. Now it’s like $40, $45 for a brand new toy. It’s such a huge jump and increase,” Gamino said.
To adapt, Gamino said, Misfit Toys is focusing even more on hard-to-obtain vintage toys. Layoffs in Houston’s tech sector are forcing many unemployed workers to sell off their collections, which the store buys at a discount and resells.
“Our gross sales have gone up. We’re able to employ more people, but our profits have gone down a lot,” Gamino said.
Not all businesses have the ability to resell collectibles.
Kacie Wright runs Houghton Horns, a specialty brass shop near Fort Worth, Texas. The company sells student instruments made in China and professional-grade instruments made in Germany, the United Kingdom and Japan, as well as cases and accessories made in India and Brazil.
“We had to raise prices,” Wright said. “We paid [tariffs of] about 40%, and we absorbed some of that and raised prices about 20%, but then we also had to remove the accessories. They used to come with tips and cleaning kits, and now you just get the instrument and the case, so customers are paying 20% more for less.”
Wright said uncertainty over the final price of rate-inclusive instruments is leading customers to delay purchases.
“If a customer wants to order a custom paperclip from us, we can say, ‘Well, at the price right now it might be $7,000, but the pricing might change tomorrow and your price might end up being $6,000 or $9,000.'”
Additionally, these instruments take three or four months to manufacture, and order delays can add more than a year to delivery times. “So if a customer wants to place an order now, we have no idea how much to charge them,” Wright said.
Paulina Gamino and Daniel Rivera of Misfit Toys in Houston show off some of their latest vintage toy purchases, a collection of Godzilla figures.
Andrew Schneider/Houston Public Media
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Andrew Schneider/Houston Public Media
Customs duties also on manufacturers
One of the main arguments Trump has made in favor of the tariffs is that they could encourage more companies to bring their manufacturing operations back to the United States. But for many small businesses, so-called manufacturing reshoring is not an option.
Missoula, Mont.-based FLATED, a company that sells truck roofs, RV shells and other automotive products made with inflatable drop-stitch PVC fabric, has no choice but to manufacture in Vietnam to turn a profit.
“I think there’s something that people aren’t talking about in this whole conversation about tariffs,” CEO Ryan Guay said. “And that’s the fact that American companies rely on manufacturing overseas, and when those costs and tariffs rise unexpectedly, it’s much easier for factories in Asia, overseas and elsewhere, to just cut out American operations and sell directly online in the United States, or even directly to Amazon.”
Guay said he would love to be able to manufacture his products in the United States, but it would cost more than his company could afford.
“And not only [because] putting the factories here… is obviously prohibitively expensive, but also the fact that the materials are not produced here,” Guay said. “So even if you manufactured the products here in the United States, you would still pay the tariffs on the raw materials that come in to make that product. »
The U.S. Treasury Department did not respond to an NPR request for comment on when or if the emergency rates would be refunded.
When asked if such reimbursements would make a difference, Guay said he didn’t have much hope.
“A refund would be great, but we’re not betting on it, based on our experience over the last year with rates and increases and decreases,” he said.
Gamino from Misfit Toys is more direct.
“I don’t expect us to get that money. We’re last in line, as a small mom and pop who doesn’t buy huge quantities,” Gamino said.
Before the tariffs, Misfit Toys was planning a major expansion, entering into business deals with wholesale toy distributors who source products from China and Japan. Rivera said that’s not a possibility at least as long as Trump remains in the White House.
“Because it could be that tomorrow he changes his mind again,” Rivera said, “and he puts his hand in his hat and says, ‘Thanks to this, I can do it again. I can raise the rates again.’ So we’re not convinced it’s over. »
