Legal Blog

Saturday Side Hustle: Tariffs and Small Businesses

The Trump Administration has used tariffs to protect U.S. economic interests in the areas of solar panels, washing machines, steel and aluminum goods, and now an estimated $300 billion in U.S. imports from China. Depending on how you are situated, you probably view this as a good thing or a bad thing for your small business. If you view this situation as not worthy of your attention as a small business owner, then you are either uniquely situated or not paying attention. Ironically, the latest round of tariffs, this time targeting China, became top of mind for business owners during National Small Business Week. Being the author of this blog, I must wonder what impacts these tariffs have had on small U.S. businesses, so I’ve done some light reading and will regurgitate some known perspectives with a little color of my own. A common perspective is that “we’re paying the tariffs,” “we” meaning U.S. consumers. If that’s true, I doubt it has the same impact on small businesses across industries. For high-margin service industries such as accounting, I suppose the cost of their office supplies could go up, but I doubt that has much impact. For low-margin businesses such as building materials, dependency on foreign suppliers could have profound effects when tariffs attach. I guess a message for small businesses might be to diversify as much as possible in terms of product offerings and sourcing. Tariffs can be merchandise-specific, country-specific or both, and in less common situations, supplier-specific if you are sourcing from a country that is subject to sanctions directed as Specially Designated Nationals, or “SDNs.” SDNs tend to have business holdings overseas that become targeted under sanctions regimes, so it’s important to know who is backing your foreign suppliers. Another theme I see in the news is that access to cash for small businesses may be impacted by trade measures even for businesses who have appropriately diversified or hedged to protect against trade volatility. This isn’t just true for importers. Secondary effects of tariffs on U.S. imports have led to retaliatory tariffs which impact U.S. exporters to the retaliating countries. It’s a vicious cycle. Most of the press on the latest trade measures seems bad, but in fairness we must consider whether there is anything good about them. The most common reason I see is that tariffs protect domestic producers of goods who are being undersold by lower priced incoming foreign goods with whom they cannot compete. Business owners can petition the government for anti-dumping orders in specific cases, but this is a costly and uncertain process that affects very specific classes of merchandise, usually being imported from a limited number of countries. Therefore, such business owners might view government intervention as helpful. Well, a lot of people think tariffs help certain businesses but not the general public, and many think that anticompetitive pricing of incoming foreign goods derives from the unfair labor laws and poor working conditions overseas. If you are specifically impacted, please share your story.  


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ABOUT SCOTT LLOYD | 301.575.0357

Scott Lloyd is a registered patent attorney who specializes in intellectual property counseling and commercialization work. He has served as a technology commercialization specialist and advisor to companies in a diverse array of markets, including biotechnology, pharmaceuticals, medical devices, food and beverage, specialty chemicals, technology, and engineering. In addition, Mr. Lloyd spent ten years as in-house general counsel to small and mid-sized companies, where he managed corporate matters and resolved commercial disputes in addition to intellectual property strategy, and now serves in the same capacity for entrepreneurial clients. He serves as counsel to small and mid-sized business owners seeking to implement growth strategies and succession plans.

While in house, Mr. Lloyd has also contributed to the successful formation of international affiliates of domestic businesses as well as a $400,000,000 business acquisition.




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