Attempting Domestic Production Proved Costly for the Companies - High Prices Deterred Customers
Small U.S. businesses are feeling the brunt of the 2025 tariffs, particularly those in the consumer goods and manufacturing sectors. Four such companies – Plufl, Moment, Bugaboo, and Simplified – serve as compelling case studies to illustrate the complex effects of these tariffs.
In 2025, the U.S. government imposed a series of tariffs, including a 10% on Chinese imports, 25% on steel globally, and tariffs on Canadian and Mexican goods. These tariffs target raw materials and finished goods, inflating input costs for manufacturers. Small and medium-sized enterprises (SMEs), which lack the scale and resources to negotiate cost offsets or supply chain alternatives, face disproportionate challenges.
For instance, Plufl, a company that manufactures human-sized dog beds, may see higher costs if materials from China are used, as they face a 10% tariff. To mitigate this, Plufl could consider nearshoring or domestic sourcing. Similarly, Moment, a technology company, may be pushed to evaluate supply chain diversification due to tariffs on electronics components and metals.
Bugaboo, a stroller manufacturer, is impacted by tariffs on steel/aluminum and finished goods from China or Mexico. Increased input costs and tariffs on imports could incentivize shifts to domestic production or alternative sourcing. SMEs like Simplified, which makes high-end notebooks, cards, and stationery, must adapt pricing or product design to handle tariff-induced cost pressures.
The tariff environment encourages companies to reconsider sourcing, manufacturing footprints, and pricing strategies but provides no easy or uniform solution. U.S.-based manufacturers face higher raw material prices due to tariffs on steel and aluminum, pushing domestic manufacturing costs up. Chinese manufacturing, while subject to a 10% import tariff when exporting to the U.S., can sometimes offer cost advantages due to scale and lower labor costs, but tariffs narrow this gap significantly.
Small U.S. manufacturers often lack the negotiating power to absorb tariff costs internally, so many pass these costs to consumers or reduce profit margins. Some companies are exploring hybrid strategies such as partial domestic manufacturing combined with tariff-advantaged sourcing or seeking tariff exemptions where possible.
The tariffs have led to inflationary pressures on equipment and raw materials, with small manufacturers and local businesses struggling to keep prices competitive without sacrificing quality or availability. The overall U.S. economic growth is dampened by tariffs, with employment in sectors related to construction and agriculture declining, while manufacturing sees modest expansion.
Long-term, tariff policies raise government revenues but create trade-offs by crowding out other sectors and raising consumer prices. For example, Plufl's CEO-founder, Emily Ley, absorbs the cost of tariffs, cutting back on other areas like investing in growth, jobs, salaries, and advertising. Ley believes that the tariffs are counterproductive to the American dream and creating businesses.
Plufl, which made over $1 million in sales in 2023, selling beds on Amazon and their own website, might have to raise retail prices due to U.S. manufacturing. However, Ley can't pass on the cost of tariffs, as her planners would cost $100 if she did. The U.S. lacks a specialized manufacturing footprint for baby strollers, requiring advanced tooling, high-grade materials, and a skilled labor force.
Other companies, like Bugaboo and Simplified, are also reassessing their strategies due to tariffs. Bugaboo has started reevaluating its strategy due to Trump's tariffs, considering moving production to other countries in Asia and the U.S. Aisha Chottani, another "Shark Tank" veteran, makes her healthy, stress-reducing carbonated beverages in Wisconsin.
In conclusion, small U.S. manufacturers are disproportionately affected by tariffs, facing increased input costs, supply chain complexity, and pricing challenges. The tariff environment encourages companies to reconsider sourcing, manufacturing footprints, and pricing strategies but provides no easy or uniform solution. Ultimately, tariffs create a challenging landscape for small manufacturers balancing competitiveness with cost pressures.
- Plufl's CEO-founder, Emily Ley, absorbed the cost of tariffs on materials from China, resulting in cutbacks in areas such as growth, jobs, salaries, and advertising.
- Aisha Chottani, a "Shark Tank" veteran, makes her healthy, stress-reducing carbonated beverages in Wisconsin, and is reassessing her strategy due to tariffs.
- SMEs like Simplified, which makes high-end notebooks, cards, and stationery, must adapt pricing or product design to handle tariff-induced cost pressures.
- Small and medium-sized enterprises (SMEs), particularly those in the consumer goods and manufacturing sectors, face disproportionate challenges due to the 2025 tariffs, leading to inflationary pressures on equipment and raw materials.
