May Small Business Briefing on Tariffs From the US Chamber

Tariffs are now affecting nearly every imported good to the United States, and many small businesses are bearing the brunt of the cost. U.S. Chamber of Commerce Executive Vice President, Chief Policy Officer, and Head of Strategic Advocacy Neil Bradley and Senior Vice President, Head of International, John Murphy, shared the latest on tariffs, including an overview of the current tariffs, upcoming risks, and what businesses should expect as negotiations unfold in the May Small Business Briefing on Tariffs.

What are the latest tariffs in effect as of May 2025?

After a series of White House announcements and changes over the course of 2025 so far, the current tariffs in effect at the time of publication include:

• 10% on nearly all imports, across all countries.
• 25% on steel, aluminum, autos, and many auto parts.
• Tariffs exceeding 150% on Chinese imports.
• Additional tariffs on products from Canada and Mexico that don’t meet USMCA compliance.

More tariffs are currently pending, including those on semiconductors, pharmaceuticals, minerals, and heavy-duty trucks.

Murphy noted that average U.S. tariff rates have surged from just over 2% in early 2024 to approximately 25% today — the highest in nearly a century.

What impact are tariffs having on small businesses?

Bradley said the uncertainty of the current tariff situation is creating practical issues for small businesses.

These include:

• Companies receiving notice that foreign suppliers are suspending delivery of products.
• Traditional customs bonds no longer covering their imports.
• Existing contracts at a fixed price are suddenly subject to higher tariffs.
• Trying to make decisions about whether it makes sense to change foreign suppliers.
• Supply chain problems if others in your supply chain are depending on foreign suppliers.

Because many smaller companies can’t afford to front-load inventory ahead of tariff hikes and lack the leverage to renegotiate supplier contracts, many are being forced to raise prices, suspend operations, or even consider closing down operations.

The Chamber is advocating for automatic tariff exclusions for small businesses, essential goods that can’t be made in the U.S., and firms facing economic hardship.

“We made a request to the administration … [encouraging them to] negotiate deals that result in zero-for-zero tariffs and the elimination of nontariff barriers,” said Bradley. “We would like to see traditional trade deals that lower barriers to trade, but … that’s … going to be weeks or months of negotiations. The American public and particularly small businesses can’t afford to wait.”

While a new trade deal was recently reached with the UK to reduce tariffs on certain sectors, the broad 10% tariff remains in place. For now, businesses should prepare for continued volatility, said Bradley and Murphy. With declining imports and increasing supply chain disruptions, small businesses may see higher costs, delayed goods, and increased consumer prices in the months ahead.

“There really isn’t, at this point, any tariff break,” said Murphy. “What we’ve seen in the [UK] announcement … is a framework for ongoing negotiations, which may take a number of months before there’s any broader relief.”

How are these tariffs affecting the US economy overall?

Increased consumer costs

We anticipate the tariffs that have been imposed to date will cost the typical American household about $4,000, and they tend to have what economists call a regressive impact. This means they’re heavier on lower-income households, which tend to spend a larger share of their income on traded goods.

Decreased global competitiveness of U.S. manufacturers

Fifty-six percent of everything the United States imports is actually raw materials, parts and components, and capital goods that manufacturers use to make their products here in the United States. Those higher costs go right into the margins of manufacturers and, in many cases, compel them to raise their prices.

When manufacturers’ costs go up, it undermines our global competitiveness. About half of everything that U.S. manufacturers make is actually for export markets. So, if their prices are forced up, they’re not going to be as able to compete in international markets.

Potential global retaliation

Tariffs draw retaliation. Canada, which is our largest export market in the world and our closest trading partner, has retaliated against billions of dollars of U.S. exports. Notably, in the auto sector, they have mirrored the U.S. auto tariff. The European Union has retaliated against the steel and aluminum tariffs, and China has retaliated quite extensively. This is something that is going to trickle into the economy and have a broad impact.

What could happen next with tariffs?

Since the tariffs that are being imposed this year fall under the International Emergency Economic Powers Act (IEEPA), they don’t require notice or public comment to make changes. This makes the current tariff situation difficult to predict. However, Bradley and Murphy agree that there is a consistent message from the administration that the baseline 10% tariff is intended to remain in place. As mentioned above, there are also other tariffs moving through this process, including lumber, pharmaceuticals, and semiconductor tariffs.

Looking ahead, the 90-day pause on the much higher global tariffs that were threatened in early April is set to expire on July 8, 2025, and many are wondering if the administration will put them back into effect. According to Murphy, “we don’t have any clear indication if that will really happen.”

“There are negotiations underway with a number of countries around the world, and how exactly this plays when we get to July is not altogether clear,” he added.

Bradley and Murphy noted that, in the past, it has typically taken years to negotiate bilateral trade agreements between the U.S. and other countries. While this process can be expedited, it’s difficult to predict how many trade agreements actually could be negotiated in between now and July, with how many countries, with which countries, and when they might take effect, they said.

Small business FAQs about tariffs

Bradley and Murphy shared their thoughts on questions from real small business owners about the current tariffs and their potential impact.

Will these tariffs result in a one-time price increase or lead to ongoing inflation?

Even if tariffs result in just a one-time price increase, that’s still a bad outcome for families and businesses, said Bradley. He also noted the potential for broader, longer-term inflation if tariff-driven supply chain shifts lead to higher prices across the board.

Could the tax bill Congress is considering offset the negative impact of tariffs for small businesses?

In short, no. Bradley explained that the current tax bill is about avoiding a tax hike when provisions from the 2017 Tax Cuts and Jobs Act expire. It would prevent new taxes, but not reduce current taxes.

“We’re still going to be stuck with the … increased cost from the tariff,” he said.

How would a tariff exclusion for small businesses be implemented?

Murphy explained that the U.S. Chamber is advocating for a streamlined process, ideally one where small businesses could simply confirm their eligibility and receive an automatic exclusion. The Chamber also recommends exempting entire product categories, especially for goods not made in the U.S., such as coffee, bananas, or specialty components.

“We haven’t gotten a positive response [from the White House] … but that doesn’t mean that we’re not going to keep pushing,” said Murphy.

There have been a number of lawsuits filed over the last several weeks challenging the President’s authority to impose tariffs under the IEEPA. Could the forthcoming rulings impact how the Trump administration handles the tariffs?

Bradley explained that the courts could rule that the administration overstepped, which might stop tariff collection or allow it to continue while appeals proceed. However, even if the court strikes down the tariffs, the President could reimpose them under other authorities.

What industries are most impacted by the tariffs? Do any sectors of the economy benefit from them?

Manufacturers, especially those that produce autos, aerospace parts, and medical devices, are particularly affected because they rely on imported parts, Murphy noted. Agriculture has also been hit hard by retaliation, and regions with heavy manufacturing and farming, like the Midwest, Southeast, and Texas, have been heavily impacted.

“It’s the nation’s heartland, more than the coasts, that are hit first by tariffs,” said Murphy.

While some U.S. steel producers have supported the tariffs, Murphy noted that even this sector is facing layoffs because their customers, such as auto manufacturers, are struggling with higher costs.

“There’s all kinds of unforeseen consequences,” he added.

When will the effects of these tariffs truly be felt by businesses and consumers?

The impact has already started, especially for businesses that must pay the new tariffs in real time — and Bradley says these effects will compound over time.

“Some businesses will feel it immediately. Some will be more protected because of [their] inventory. Some have greater ability to delay price increases,” he said. “But every week that goes on, the negative impacts are going to build.

What can small businesses do to advocate for themselves?

Bradley advised small businesses to tell their story. Regardless of their political leanings, lawmakers are often influenced when they see the real-world consequences for small businesses in their districts.

“The best form of advocacy is … factual presentations of what’s happening,” said Bradley. “Elected officials … want to try to find a way to help. The more they hear from you, the better off we’ll be.”