Small businesses were already struggling. Tariffs will end the viability of many. 
Current Employment by Employer Size
- Small: 58.6 million jobs, 43.61% of total
- Medium: 39.0 million jobs, 29.04% of total
- Large: 36.8 million jobs, 27.35% of total
ADP Change in Employment by Employer Size
Year-Over-Year Change in Employment by Employer Size
- 1-19 Employees: 375,000
- 20-49 Employees: 46,000
- 50-249 Employees: 314,000
- 250-499 Employees: 110,000
- 500+ Employees: 841,000
Year-Over-Year Change in Employment S/M/L
- Small: 421,000 (25.0%)
- Medium: 314,000 (18.6%)
- Large: 951,000 (56.4%)
Despite accounting for 27.35 percent of jobs, large businesses accounted for 56.4 percent of job growth in the past year.
Which Companies Are Least Prepared for Tariffs?
That’s easy. Small businesses.
Trump hosted meetings for the auto manufacturers, then meetings with chip manufacturers, then meetings with executives at Walmart and large employers.
Trump handed out a few breaks, especially to the auto industry.
No one speaks for the small manufacturer who imports steel or aluminum to make parts.
And no one speaks for small resellers with supply chains to China or Vietnam.
Supply Chains
Large businesses will get hit too, but they are better able to move supply chains from China to India or Vietnam.
Then what?
Trump is likely to go after Vietnam next.
There is record uncertainty regarding these on-off moves by Trump, but the least able to afford repeat mistakes (or tariffs in general) are small businesses.
Apple can switch to India and Nike to Vietnam, but avoidance is disruptive, costly, and not an option for many small businesses.
Although India and Vietnam are winners (for now), none of these switches brought a single job back to the US (and won’t) factoring in higher prices and avoidance costs paid by consumers.
Consumers Face End of De Minimis Tariff Exemptions on $800 Packages
On May 2, I commented Consumers Face End of De Minimis Tariff Exemptions on $800 Packages
The trade provision that allows consumers and resellers to avoid duties on shipments worth $800 or less is ending for products made in China.
Hooray!? 40% to 100% Higher Prices
Who wants that? (Exclusions for cultist parrots who cannot think).
The original title of my post was “E-Commerce Sellers Face End of De Minimis Tariff Exemptions on $800 Packages”
Both titles ring true. Shortly after posting I opted for a shorter title.
For a while, I would not be surprised to see orders to China first shipped to Vietnam then from Vietnam to the US. But Trump will soon put an end to such tactics if they gain steam.
What Companies Won’t Survive These Tariffs?
Any business dependent on China will not survive.
Any business that cannot handle 25 percent tariffs on steel and aluminum will not survive.
US auto parts suppliers will find the auto manufacturers looking to cut costs somewhere. If that means Vietnam or Mexico (even for a while), those companies will not survive either.
Every business will face price hikes they will either have to eat or pass on. Businesses who can neither eat the cost nor pass it on will survive.
Large corporations are far more likely to survive. Hooray?
Republicans Against Trump
GOP Senator Rand Paul: “Tariffs don’t punish foreign governments. They punish American families. When we tax imports, we raise the price of everything—from groceries to smartphones to washing machines to prescription drugs.”
Rand Paul for President anyone? Count me in.
How Much Would a Made in the US iPhone Cost?
I discussed automation on April 7, 2025 in Sticker Shock: How Much Will an iPhone Cost with Trump’s Tariffs?
To avoid China tariffs, Apple Plans to Source More iPhones From India
“If consumers want a $3,500 iPhone we should make them in New Jersey or Texas or another state,” research firm Wedbush said in a recent note.
One reader commented “Instead of looking at this as a glass half full thing, Mish, you are just determined to be negative. There are adjustments that will be made to this new reality.”
The Old, New, and Persistent Reality
There are 335 million consumers all of whom benefit from lower prices.
Manufacturing employment is 12.7 million out of a total of 164 million.
Yet, we produce more output now than when manufacturing employment was 20 million. This is a result of automation and productivity.
But ta da, I am now on your side. I will wave my wand and double manufacturing employment to 25.4 million. TA DA!!!!
Now we have shoes that cost 3 times as much, appliances that cost 3 times as much, and exports of which that head to zero because the US would be the highest cost produce in the world.
But hooray!!! We have an extra 12.7 million people creating shoes, underwear, clothes, and lawn mowers that no one can afford unless of course we raise the minimum wage at McDonald’s to $45 an hour.
And cheap tomatoes from Mexico. Who needs em? Let’s pay agricultural workers $45 an hour too.
That is the “new glass half full reality” that I fail to see.
New Economic Theory “Tariffs Are a Tax Cut for the American People”
In one of the most stunning displays of economic stupidity in history, please consider New Economic Theory “Tariffs Are a Tax Cut for the American People”
Reporter: Trump is proposing tax hikes in the form or tariffs.
Karoline Leavitt Trump’s Press Secretary: Not true. He’s actually not implementing tax hikes. Tariffs are a tax hike on foreign countries, that again have been ripping us off. Tariffs are a tax cut for the American people. And the President is a staunch advocate for tax cuts.
The Amazing “Success” of Trump’s 2018 Aluminum Tariffs in One Picture
Those wanting more Mish sarcasm can find it in my March 13, post The Amazing “Success” of Trump’s 2018 Aluminum Tariffs in One Picture
I hope you can take a bit of headline sarcasm because the true story follows.
How Much Credit Expansion Does It Take to Grow Real GDP?
Detail Since 2019 Q4
- GDP: +2.55 Trillion
- US Government Debt Held by Public: +11.67 Trillion
- US Government Debt: +13.00 Trillion
- Total Credit: +27.33 Trillion
On April 2, 2025, I asked How Much Credit Expansion Does It Take to Grow Real GDP?
To grow GDP by $2.55 trillion since 2019 Q4, Total Credit Market Debt Owed (TCMDO) went up by over $27 trillion.
This would not happen with sound currency. And it is nothing tariffs can possibly fix, even if Trump understood trade (which he doesn’t).
Click the above link for President Nixon’s role in this mess.
The problem is an unsound dollar, fiscal spending out of control, and a Fed that is willing to monetize the debt.
Meanwhile, Trump is hell bent on destroying the dollar and increasing the deficit. Good luck with that.
Trump’s Plan to Make Manufacturing Great Again
For discussion of the absurdity of this setup, please see Trump’s Plan to Make Manufacturing Great Again in Pictures
The share of manufacturing employment keeps declining. What role did NAFTA play?
Instead of being the richest country in the world with the highest standard of living, the economic illiterates appear desperate to be more like Vietnam (a country that aspires to be more like the US).
Trump tips his hand when he brags about all the money “we” will have from tariffs. Substitute the word government for “we” and you have it! Trump want a VAT like revenue machine for all his wonderful pretensions like Greenland, Canada, space corps etc. Tariffs are a revenue enhancer for the government meant to fund Trump’s grandiose visions. I look for a 10% tax on imports.
Rivian to build $120 million Illinois supplier park to lower tariff-related costs
Must be a Governor Pritzker thing?
I’ve been saying all along that even if this is all revered today, the world will not forget we slapped everyone in the face and called them names, and this will hurt US businesses and cause a much larger trade deficit than tariffs by other countries
https://www.nytimes.com/2025/05/05/business/tariffs-europe-boycott-american-goods.html
Few revere the US any more buddy.
This will certainly crimp the style of the “Wheeler Dealer” type.
In the last decades many large and small businesses imploded after they were subjected to a slow systemic change. Owners and ceo didn’t understand what is going on. The US is going through another systemic change. It’s risky, but we are obligated to do it before we break apart. Otherwise we might be divide to a few incoherent independent states between two oceans, repeating the old world history of hatred and disintegration instead of a superstate which controls her fate. If we disappear many counties will be ruled under Chinese mandate. They will be the PRC subjects.
Who cares. People will just have to get by with two dolls instead of 30. Pull yourselves up by your bootstraps.
the retailers in the US who sell the dolls won’t get by,
the cirrent economy we have is consumption based, so if you’re saying well we just need 1/th the consumption get ready for financial disaster.
Mish, I’m a big fan of your analysis, but I’m confused by the vitriol directed at Trump for trying to create a level playing field for international trade. Would there be fewer distortions and better allocation of resources if there were little-to-no barriers to trade? I think most economists would argue “yes.” Given that the U.S. faces much higher tariffs overseas than exporters do to the U.S., wouldn’t global economic growth be better served by a more equal tariff structure? If so, how do you achieve it without short-term dislocations? The current situation has emerged over 50 years. It will take time to change that. It seems that your argument is that since there will be short-term costs to adjusting, we shouldn’t adjust at all. That makes no economic sense if you believe that tariffs distort trade and the economically efficient use of resources. I understand that the process Trump is following may not be the most rational, but I think your energy should be directed to proposing a trade and tariff policy that would allow for a more level international playing field for trade.
“I understand that the process Trump is following may not be the most rational”
I think this statement answers your question about the vitriol. The better question to ask is why don’t you expect better and add your own vitriol to the irrational nonsense being contrived and executed.
You want alternatives?
Reduce corporate tax rates in the US to zero.
Eliminate the payroll tax to make hiring more affordable.
Reduce manufacturers tax to zero.
Instead Trump is taxing Americans to death and you are worried about vitriol against him. Sad and pathetic, you can try to hide your MAGA allegiance but it always shines through….
you’re focusing on one of Trump’s ever shifting multiplicity of reasons for the tariffs (no barriers trade). he also said he wants it for reshoring and to bring in revenues.
his tariffs are idiotic, and not thought out to do anything.
You can’t change what’s been built up for 50 years, and it won’t be short term pain. let’s say his plan for onshoring works. how long will that take? and what happens to the millions of retail, manufacturing and other jobs in the meantime? you think the US survives for 10 years with million out of work? what about the financial disaster this would come with? foreclosures etc.. How can domestic auto producers find billions to build factories here while their business is decimated for 5-10 yeas?
you haven’t though tit through, and neither has Trump. He admitted as much, saying he came up with the tariffs 3 hours before announcing it
Sorry Karl. Your premises are wrong.
In a world where you eliminate all tariffs and trade barriers, the US would be very uncompetitive.
Use the example of the Toyota EV made in China and sold for $15,000. Made here it would sell for $50,000.
Now imagine no tariffs or trade barriers anywhere in the world. Within a year, all our auto plants would shut down and we would be importing all our vehicles from China, and other low cost countries. Just like we import our clothes and shoes. Because they can produce them there for much lower costs than we can.
Trump has convinced you that America can compete in manufacturing with a level playing field. This is false. There are very few things we can compete in when it comes to manufacturing.
What Trump is doing is actually making it worse for US manufacturers. He is raising their input costs by putting tariffs on things they must import such as aluminum, steel, parts etc. All this does is raise their costs and makes them LESS competitive.
The goal of making America competitive again is a laudable goal. What people here are criticizing, are Trump’s methods. They are only going to make things worse.
LOL. You are doubling down on things costing 3X as much. I told you the inflationary aspects of the tariffs will be mild. My bet stands. I will bet you $1000 that the inflation rate will not be over 10% in the next 12 months. Are you going to put your money where your mouth is?
When it comes to say shoes, which is where you are obsessed, one of your readers says shoes in a mostly autonomous factory would cost 7% more. The issue is the costs would be upfront. The reason you need tariffs on China is they do not care about making a profit. The CCCP just wants people working. That is why they are building so many empty homes. Without tariffs, if you opened shoe factories, China would be dumping shoes way below cost to destroy the new business.
I heard the same kind of gloom and doom you are spreading today about oil in the early 2000s. Gee, what happened there? Supposedly, there was no way we could compete with the Saudis on production costs.
And as far as your obsession with cheap things, they do come at a price. Foxconn had to put up nets at factories because so many of the workers were jumping committing suicide. Then you have China being the world’s biggest polluter.
And just you wait. The lax third world safety standards are going to have even bigger issues. Can you imagine if those lax safety standards were at a facility with hazardous material and the cost of that? Oh wait, that already happened with Covid.
That is the thing with Democrats like you. You continue to give China a free pass on Covid. How much did Covid cost? Is it worth those cheap cars? That is the real reason, cheap goods, why the world did not hold China accountable for Covid. If you called it the China virus, you were racist.
I will bet you $1000 that the inflation rate will not be over 10% in the next 12 months. Are you going to put your money where your mouth is?
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buddy! you have no idea about macro or business in general? ever ran lemon stand?
appears not .
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lets SAY you hike FOR GLASS OF LEMONADE.
people would just stop buying or find substitute,,so you as businessman must LOWER PRICE OR GO UNDER
see??? between inflation and deflation, deflation is way worse, cause it sign of lack of demand, so business must drop prices.
problem, is most of businesses operate on debt, so they need increasing prices to serve one.
so…9 our of 10 times I prefer inflation not deflation.
alx
You are confusing inflation/deflation with demand.
A lack of demand is not deflation and doesn’t mean deflation.
indebted businesses and households and nations, inflation is preferable. for folks like me with zero debt in my business or home, i prefer deflation. i have no say over our government but still vote green or libertarian in usa and 5 star in italia.
Do you think households can tolerate an additional 10% inflation? Most can’t make ends meet now.
You have businesses hoping boats sink rather than unload deliveries from overseas ordered months ago. And with lead times for anything but the most off the shelf running weeks and months, are they going to play tariff lotto and hope they are off agian by the time new orders arrive?
Small businesses are the economic engine of job growth.
They are the “Little Guys”. that made America a great nation.
When I lived in Florida near trump he was always failing to pay small contractors and telling them to “Sue Me” if they wanted to get paid. This bankrupted may small contractors as they did not have the resources to fight trump.
Picking on the little guy is trumps method of operation. Classic bully behavior.
Now trump has figured out how to bully all American small companies while telling them that the pain is good for them.
Classic sociopathic behavior…
I’ve heard the same story. Hopefully, it isn’t true but I wouldn’t put it past Trump.
– Current Employment by Employer Size:
Small: 58.6 million jobs, 43.61% of total
Medium: 39.0 million jobs, 29.04% of total
Large: 36.8 million jobs, 27.35% of total
> “Future” Employment by Employer Size:
Small: 36.8 million jobs, 43.61% of total
Medium: 39.0 million jobs, 29.04% of total
Large: 58.6 million jobs, 27.35% of total
Why not? The “Small” could use a shoring up, as it will make what’s left a whole lot stronger. With the incoming Jobs from investment of many Corporations coming along, the lost if you will, “Small” Jobs, will get mostly consumed by the “Large” Jobs.
I see this as a Good Thing for Companies. The “Small” will downsize, but get much stronger. This is Great, because those Jobs are the backbone of America. The Medium will fluctuate as always between looses to “Large” & “Small” alike. The Large will pick up much needed help, and from younger and older alike, which is typically what’s represented in “Small” I do believe. All areas pick it up and get better for it!
Chicago Teachers Union – “Make It Safe”
Chicago Teachers’ Union Super Cringe Interpretive Dance video. “Stay safe. No school!”
Every one of these leaches should have been fired on the spot.
Choices for students:
Sal Khan – Khan Academy
or
run the streets
Either way, better education.
In the 50’s and the 60’s Ford and GM were the largest globalists in the World. The dems stopped them (JFK, Senator Ribickoff and Ralph Nader). Since the 70’s/80’s they became a shadow of themselves. They lost their guts and bearings. For decades mfg jobs/labor force deflated. Lately the bleeding stopped despite an inflow of illegal immigrants. The zoomers like Trump because new hubs under constructions and their satellites will provide higher paying jobs, protected by tariffs, which will produce Essential stuff vertically and efficiently. These plants will prevent bottlenecks and blackmails. The zoomers will make more money than their deflating grandpas who cannot adjust.
You understand.
oilIn the 50’s and the 60’s Ford and GM were the largest globalists in the World. The dems stopped them (JFK, Senator Ribickoff and Ralph Nader). Since
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BS as usual!
oil embargo and arabs in 70х killed american cars! oil went up as rocket!
there were real gas shortages in USA all over places. it was not practical to drive amerecan gas hogs
i guess you have no idea about that period
i sold beer and soda on gas lines……….cops even bought beer from us. we were 16.
The democrats protected the UAW (hence the auto manufacturers) with tariffs in the 60′ and 70’s. I doubt if this poster purchased an American junk car back then.
Yes, it will be an adjustment, but economics teaches us, at the basic level, about the experience curve. As you make more of something, the cost comes down. You want to surrender before the battle has even started. You want things to stay the same as they were, when, were what was happening before allowed to continue, we would become, basically, a colony of China. China wants to dominate every aspect of the world economy for their own benefit/security, when they would do much better to be more cooperative.
Small businesses were hit hardest during Covid. The thread once again, full of the usual TDS suspects. Poo poo, pee pee. Austrian economics is a thought process, not a religion.
To make matters even worse he is pushing the Fed to lower interest rates. Who benefits most from lower interest rate? Rich people benefit most. Wall Street over Main St. Those are Trump’s policies.
The Fed will not fall for trumps bluff. They will act when it is appropriate and todays ISM numbers do not support an interest rate cut.
Right now trumps abuse of power is causing lots of paper cuts, but it takes time for the deeper cuts that are coming to be concrete evidence for the Fed to cut.
Rest assured that there will be blood in the streets in a few months. Then the Fed will have to lower rates to bail trump out of his idiocy.
no really. lower rates are better for in debt people. poor people.
rich people like high rates. they just sit tight!
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loot at BUffet . he’s got 350 bln in short notes, making 4*5 % each year
if fed dRop rates, he must deploy capital
Nobody GAF about small businesses 5 years ago. Covid Theater, you know. “If it saves even one life…after all…we’re all in this together!” Walmart et al big boxes laughed all the way to the bank.
we did GAF, which is why there was massive stimulus. there were other overriding concerns like figuring out if we were all gong to die. thankfully it was quickly realized we weren’t. I was in NYC and can tell you by early May 2020 the sidewalks were packed with people drinking and eating.
But yes, the Trump shutdown was in hindsight a huge mistake. and make no mistake: the ONLY federal Covid shutdown was ordered by Trump, who then ordered his admin to do everything possible to produce the Trump vaccine, which the MAGA-cult somehow blames on Dems.
the maga cult are basically special need retards.
Trump is going to kill off all the small businesses that he forgot to kill when he shut down the country for covid during his first term.
Worst.
President.
Ever.
right, and unlike during Covid he isn’t going all out to create a Trump vaccine.
There are two kind of Trump voters, those who knowingly vote to make the rich richer, and those who vote for Trump and are total suckers. Everyone who didn’t vote for Trump said he would ruin those who aren’t already rich, and here we are. Trying to warn suckers doesn’t work, it just makes them bigger suckers.
adjustments required in the new world
lower wages
fewer jobs
higher costs
sounds like a winner
I think we need a discussion of what happens after Trump fails. Do Democrats ever develop good sense? Will the US be isolated by persistent diplomatic failure? War with Iran, maybe? I think the US will evolve into a 3rd world nation unavoidably but is there any hope of reform?
The entire Republican Party seems to have a death wish.
Give them what they ask for.
There is always hope.
However I have yet to see a “smart” politician.
Why would anyone who is that ‘smart’ waste time in politics, Better do something more consequential.
The internet’s small business owners are coming to understand what Trump’s tariffs mean for their bottom line. https://gizmodo.com/can-this-be-right-reddits-small-business-community-is-freaking-out-over-trumps-tariffs-2000586757
The small business owners that were clueless about politics will now become clued in and blame 100% of this on Trump & the GOP. They will vote for democrats at the mid-terms and next presidential election.
Those small business owners that voted for Trump will now suffer and reap what they’ve sown. The smart ones will switch their vote and the dumb ones will continue to double down until they’re financially ruined.
In the end, Trump will have accomplished nothing but a short term high for himself and his elite.
Trump is hitting the economic engine of our economy. The hard working business starters that create jobs and pour their hearts souls and equity into building a business.
After all, it is all about “Winning” (for trump and his sycophants)
Everyone should take a look at this chart.
https://fred.stlouisfed.org/series/FPCPITOTLZGUSA
COVID happened in 2020 along with the shutdowns soon after. It took two years for the supply chain disruption to spike inflation
Trump’s tariffs, although frequently postponed, start effectively now so I expect inflation to start spiking over the next year slowly then faster.
The only caveat is if this tariff war leads to a deflationary collapse and endless bankruptcies. Either outcome is not good for anyone so hedge for either accordingly.
One important difference here is covid came with massive stimulus. We were stupid enough to forbid people from working while dumping so much money on them that in aggregate there was more spending power than when they were actually producing things.
Half of this is the same. The other half isn’t. You have tariffs that are inflationary and the resulting economic hit that is deflationary. Its not clear to me which factors would be dominant a year or two from now.
Its not enough to know the various factors that may push inflation one way or another. You also have to know which ones will be most impactful. I can’t say I do.
Trump’s budget includes $4+ trillion rise in debt ceiling. Are we on the same planet reading the same news?
The same news where they are laying off tons of federal workers, and canceling outgoing payments, and trying to cut 150 billion in discretionary spending? Apparently not. Yes they will continue to outspend revenues by trillions, but they were already doing that.
They are not proposing a massive increase in overall spending versus what was already happening. Its the delta thats relevant here. Thats whats different for people who can not only read the news, but also understand it.
You are so dumb: “They are not proposing a massive increase in overall spending”
What do you think $4 trillion is Ryan? $4 trillion.
4 trillion is 2 years of existing deficit spending. Someone who isn’t an idiot wouldn’t conclude that means a massive increase in spending as we saw in the previous episode.
For details on how they seem to intend to reduce spending can be found here.
https://apnews.com/article/house-republicans-budget-blueprint-trump-tax-cuts-ff2bddf31f4e7cb0928139072392a091
Personally I’d assume spending will increase, but not at the level we saw previously.
Don’t forget to brag about your penis/portfolio size in your response.
Bookmarked and we’ll check in when Trump leaves office, already put it on my calendar. Guaranteed you’ll look like a fool.
Well this is my assertion
“ Personally I’d assume spending will increase, but not at the level we saw previously.”
I know I need to explain this like I’m talking to a 5 year old, but I don’t think Trump will cut spending. I’ve got an open bet that says he won’t.
What I don’t believe is that we will get some kind of blowout level money dump as
we did during covid. That would mean we don’t see the overwhelming inflationary impulse we got last time.
I tried to address you like an adult with my original response when I should have addressed you like someone who only reads books with fur and other things you can touch.
There’s a difference between an organic process (covid changes) and immediate effect changes. Who in the supply chain is going to eat the cost of a 145% tariff?
It’ll be faster than with covid.
YOU are eating most of the tariff cost if you want to buy goods. That’s where the inflation will come from less goods, tariff prices.
Like I said, the caveat is if everyone starts losing their job and have no money to buy anything. It’s bad either way.
That chart shows inflation rate, not prices. Even though inflation rate spiked and the rate has come down; prices are still rising .