Peter Mihalik

A black humor joke in the medical profession is “the operation was a success, yet the patient died.” That is to say, the surgery worked on a technical level, yet the patient didn’t pull through, which is the result that matters.

In an economic metaphor, President Trump is the surgeon. He’s using tariffs to attempt to improve the country’s financial health. It is a worthy goal. However, even if those tariffs eventually succeed, the patient may not survive because too many small businesses are expected to fail during the time it would take for the tariffs to have a positive effect.

There are stories of businesses taking shipments of goods they can’t afford because of tariffs. One customer took delivery of $3,500 worth of goods; with the 170 percent tariff rate, those goods suddenly cost close to $6,000. If the ship had arrived a day later, the tariff bill would have been 55 percent, or less than $2,000.

The example highlights two problems of the Trump administration’s tariff policy: tariffs are too expensive, and they are too unpredictable.

The U.S. Chamber of Commerce recognized these problems early on and sent the administration a bold letter requesting relief. The group generally supports fair trade, such as zero-for-zero reciprocity on tariffs and a reduction in non-tariff trade barriers. The Chamber wrote, “Quickly and successfully concluding these negotiations and ending the U.S. tariffs imposed in the year to date is critical given the negative impact recent tariffs are having on the U.S. economy, employers, and American families.”

At a minimum, the Trump administration should establish a process for tariff relief for small businesses that can demonstrate they have no alternative but to cease operations or petition for an exemption. The Chamber sent a letter to the Trump administration with a great idea — to grant automatic extensions for any small business importer if the company can demonstrate that tariffs pose a risk to the employment of Americans, if the company cannot obtain the materials in the United States, or if the products are not readily available domestically. This is a reasonable way to protect small businesses from harm.

The effects of tariffs on small businesses are apparent to any company that has a supply chain overseas, even if it will then use that product to improve commerce in America.

For example, Dan Turner, the owner of Turner Hydraulics in Carlisle, Pa., ordered a $49,000 part from China before Trump’s first round of tariffs, then learned the part would cost him an extra $84,000 by the time the ship arrived. “We’re just hoping either the ship sinks or somebody comes to their senses before it hits the dock,” Turner quipped.

In reality, hoping for insurance fraud is not a viable long-term strategy for success. Tariffs are making things too expensive.

The second problem is that small businesses can’t plan for the future. If Mr. Turner had realized the price of his part was going to jump by $84,000, he likely wouldn’t have purchased it. Tariffs, especially in this administration, make it impossible to plan. There is no reason for any business to buy anything from abroad right now, because of the uncertainty about what the tariff will be next week, next month, or next year.

“We have heard from a historic number of small businesses who have made it clear: they need immediate relief from tariffs,” Chamber CEO Suzanne Clark said. “As each day goes by, small businesses are increasingly endangered by higher costs and interrupted supply chains that will cause irreparable harm.”

The tariffs are already making it more difficult for small business owners to get by.

“In a regular year, you buy what you need and you invest,” Mohit Jagwani said about his business, Rubber Track Wholesale. Tariffs are driving up his costs and shrinking his margins. “Now, we only have time to focus on inventory, to keep ourselves afloat. There’s no time to think about growth. It’s just survival.”

Many small businesses operate with small profit margins and competitive pricing, which means they cannot pass higher costs on to customers, as doing so would result in financial losses and potentially lead to business closure. Small businesses, the economic and employment powerhouse of the United States, need relief from the tariff regime right away, before it is too late.

— Peter Mihalick is a former legislative director and counsel. He wrote this for InsideSources.com.