Small Business & Economic Policy: Insights on Tariffs and Trade

Author(s): Scott Douglas Jacobsen

Publication (Outlet/Website): The Good Men Project

Publication Date (yyyy/mm/dd): 2025/04/29

Ben Johnston joined Kapitus in 2014 as Chief Strategy Officer and became COO in January 2017. Prior to joining Kapitus, Ben was a Principal of Pine Brook Partners, a New York-based private equity firm, a Senior Associate at Lightyear Capital and an Analyst in the Office of the Chairman at PaineWebber. He holds a BA from Colby College and an MBA from the University of Michigan’s Ross School of Business. David McMenomey is a digital marketing expert and Redemit1 founder, specializing in scalable online advertising for small businesses. His $30M+ sales strategy helps e-commerce brands, coaches, and course creators profitably scale on Facebook, YouTube, and Instagram. Collin Plume is the Founder and CEO of Noble Gold Investments, a precious metals IRA broker he founded in 2016 and My Digital Money, a crypto trading platform founded in 2021. He is the co-owner and CEO of Guardian-HR, an online HR service. Windy Pierre is the founder of Windy Pierre Dot Com, specializing in eCommerce and digital marketing. He develops strategies to optimize SEO, content marketing, and growth for businesses, ensuring targeted success. Chat Joglekar is CEO of Baton and former Zillow exec, offering expert insights on SMB valuations, acquisitions, and navigating economic shifts under evolving 2025 policy changes.

Scott Douglas Jacobsen: What is new with the Trump Administration?

Ben Johnston: The Trump Administration is focused on lower taxes, less regulation of business and the environment, less immigration and the expulsion of the undocumented from the United States, higher tariffs on goods manufactured abroad, and a more efficient federal government. 

The key question for small businesses is how the political and economic changes that have been promised by the Trump Administration will impact inflation, interest rates, unemployment, taxes, and tariffs. 

We expect the economy to grow in 2025 but also expect inflation to accelerate. Small businesses will have a difficult balancing act of capturing economic growth, while weathering accelerating costs.

Jacobsen: How is the political environment affecting things?

Johnston: The political environment: The Trump Administration entered office having won a clear mandate for change. Exactly what this change entails is still an open question, but it is safe to assume that it will include lower taxes, less regulation, smaller government, higher tariffs on imported goods, tighter immigration standards, and a reduction in the undocumented population. Lower taxes and less regulation will clearly be embraced by the business community while the long-term popularity of the other initiatives is debatable. What is clear is that business owners will be watching these developments closely as they will impact inflation, the cost of capital, the cost of goods sourced overseas, and overall economic demand.

Jacobsen: What is the nature and impact of these tariffs?

Johnston: Tariffs: President Trump has proposed various tariff plans at various times on the import of foreign goods, including from China, Mexico and Canada. Tariffs of this significance could over time make manufacturing in the U.S. more economic relative to importing goods from abroad, which could be good for some industries, but in the short to medium term, these tariffs are likely to drive inflation significantly higher and cause significant disruption to the global supply chain, threatening many U.S. jobs at manufacturers, wholesalers and retailers who rely on the global supply chain to source the components, raw materials, and finished products they sell. Higher tariffs will certainly cause prices to rise for U.S. consumers, as tariffs drive up the cost of the product being imported and these costs must be passed on to the customer. This will not only spur inflation but will lower overall consumption, slowing the economy. However, in the long run, higher tariffs may help protect the viability of certain U.S. manufacturers and could incent greater investment in U.S. manufacturing. While this would be a positive for some sectors of the economy, the impact of tariffs is difficult to predict as we can expect U.S. exports to impacted nations to be struck by retaliatory tariffs, reducing demand for goods produced in the U.S. and sold abroad.

Jacobsen: What about the contexts of rising inflationary and efforts to drop it?

Johnston: Inflation: The Federal Reserve has succeeded in bringing inflation under control without causing a recession, a feat many of us viewed as unlikely when inflation peaked at 9% in June of 2022. Unemployment remained low throughout the tightening cycle and wage growth is helping consumer purchasing power catch up to prices which today are rising more slowly. We expect inflation to drift lower throughout 2025, barring a major policy intervention or significant changes to Fed policy the remainder of the year. However, we view many of the stated policy goals of the administration as inflationary. Specifically tax cuts, tariffs and expulsion of the undocumented. Were these policies to be enacted in their proposed form, the U.S. economy would almost certainly experience another inflation shock. Fortunately, many of these proposals appear to be starting points in a negotiation rather than settled policy. The business community, fresh on the heels of the last inflation shock, will be watching these policy changes closely and are prepared to act quickly should inflation return.

Jacobsen: How is the global supply chain functioning?

Johnston: The Global Supply Chain: The global supply chain today is functioning better than it was several years ago as we emerged from the pandemic. However, critical issues continue to challenge small businesses sourcing materials and selling overseas. During 2024, persistent disruptions in the global supply chain stemming from wars, pirating, strikes, infrastructure failures, and inclement weather combined to disrupt the global flow of trade. Now, the threat of significant tariffs on large U.S. trading partners are forcing wholesalers, retailers, manufacturers, and many other business owners to reexamine their supply chains and develop sourcing strategies that reduce the cost of tariffs while still ensuring the timely delivery of goods.

Small businesses have learned from previous disruptions the benefits of shorter supply chains and greater onshore production, and today with the added threat of large tariffs, these benefits are amplified. As a result, we expect to see continued growth in domestic manufacturing and the integration of new technologies that promote automated production. While we expect the growth in U.S. manufacturing and automation to be net positives for the U.S. economy, we are very worried that the pace of this change will be highly disruptive to the global supply chain, and we hope that whatever changes are made are implemented in a gradual and deliberate manner.

Jacobsen: What about the resiliency of the manufacturing?

Johnston: Manufacturing: The U.S. manufacturing sector proved resilient in 2024 as it faced persistent disruptions in the global supply chain from attacks on shipping by the Houthis in the Red Sea, to a drought that limited traffic through the Panama Canal, to a bridge collapse that closed the Port of Baltimore, and a Port Strike on the Eastern Seaboard. We expect 2025 to present an even greater challenge for manufacturers as they navigate the potential impact of new tariffs on their ability to source raw materials and components from abroad. However, we also see tremendous upside for U.S. manufacturers who are poised to benefit from U.S. tariffs that protect them from foreign competition and provide incentives to expand domestic production.

As a result, we expect to see continued repatriation of manufacturing to the U.S. in 2025 as businesses seek shorter and more reliable supply chains and work to avoid the cost of new tariffs. However, because so many manufacturing components are sourced overseas, domestic manufacturers will need to explore vertical integration strategies or locate components closer to home if they are to avoid the impact of these tariffs on their expense base. Growing manufacturers will also need to contend with the challenges of staffing in a tight labor market, given new immigration restrictions and the potential expulsion of undocumented workers. It is estimated that approximately 5% of U.S. manufacturing labor is undocumented.

Jacobsen: What are we seeing in growth and the commerce world?

David McMenomey: In the e-commerce world as well as the local land development world, we have seen an increase in product launches in Q1 so far. Q4 was filled with uncertainty and fear from many offer owners, causing online advertising budgets to shrink and new offers to sit on the shelf for a few months. 

Since President Trump has come into office for his second term, we have seen new offers being released for testing and new projects coming across our desk for review. 

One company I was in talks with back in September about testing their new men’s hair growth offer through Meta Ads delayed their launch until after the election results were confirmed. We successfully launched in mid-November. 

I was working with the economic development director for a local city in Idaho, and she echoed what I saw. She told me her phone started ringing off the hook the day after elections were finalized, with green lights on projects from land developers waiting to see how the election would go. 

There is a renewed growth mindset to start 2025 that went dormant over the last half of 2024.

Jacobsen: What seems to be the goal for the administration here?

Collin Plume: Short-term pain for long-term gain. That’s what we are looking at. When it comes to business, however, short-term means 4-5 years and that could be fatal to a small business. Very few small businesses have the cushion of multiple bank loans or government rescue. A few bad months can totally annihilate a small business. 

Trump’s end goal is to bring manufacturing back to the US, stop giving aids and control our national debt. That’s essentially undoing decades of policies and practice. Naturally, relationships are getting tested and the US will suffer some casualties but there really is no other way. This is not a 5-year project. This is more like 10, maybe 20. Companies can’t just uproot their operations from China. 

If he succeeds, it will benefit small businesses and consumers too. Big companies mean more jobs and more needs that small businesses can provide. That also means more dispensable income.

A reprieve can come sooner. If DOGE manages to save trillions of dollars, Trump is considering giving some to Americans. That’s more money in the economy and more spending power for Americans. That’s always good for businesses. If he also manages to pay off a significant amount of our debt, we might not have to print as much money which translates to lower inflation. 

Those are short-term reprieve though. It doesn’t change the fact that businesses will have to strategize, change their marketing and message, look for new vendors and even redesign their operations to accommodate policy changes. It’s quite literally the only way to survive. 

Jacobsen: What are the effects of these policy and economic shifts on small businesses?

Windy Pierre: From my experience working with small businesses, one core challenge is maintaining healthy profit margins amid fluctuating tax policies and potential import/export regulations changes. Since President Trump began his second term, I’ve seen a 5–10% increase in operational costs for some of the small businesses I advise, mainly due to shifts in trade policies. Despite these pressures, those who monitor KPIs like customer acquisition cost (CAC) and inventory turnover weekly can make more proactive decisions, mitigating potential losses by 5–8%. I also recommend building a robust contingency budget, aiming for 10–15% of monthly revenue set aside to handle unexpected regulatory or supply chain disruptions. Ultimately, keeping a close eye on short-term cash flow and long-term strategic KPIs ensures that small businesses remain agile and better prepared for policy-related uncertainties.

Jacobsen: What are your general thoughts, Chat?

Chat Joglekar: With the current unpredictable tariff situation under Trump’s aggressive approach, SMBs would be wise to hold off on major strategy changes until we have more clarity. The economic landscape remains too uncertain to make informed long-term decisions. Keep a watchful stance, gather information, and preserve flexibility rather than making reactive moves based on incomplete information. Trump’s confrontational trade policies may cause significant market disruptions and fear or a new Great Depression, but right now, patience and careful monitoring will serve most small and medium businesses better than premature pivots.

Jacobsen: Thank you for the opportunity and your time.

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