{"id":334,"date":"2026-05-13T16:30:31","date_gmt":"2026-05-13T16:30:31","guid":{"rendered":"https:\/\/californiamovingreport.com\/index.php\/2026\/05\/13\/how-tariffs-and-war-are-hurting-california-small-businesses-2\/"},"modified":"2026-05-13T16:30:31","modified_gmt":"2026-05-13T16:30:31","slug":"how-tariffs-and-war-are-hurting-california-small-businesses-2","status":"publish","type":"post","link":"https:\/\/californiamovingreport.com\/index.php\/2026\/05\/13\/how-tariffs-and-war-are-hurting-california-small-businesses-2\/","title":{"rendered":"How tariffs and war are hurting California small businesses"},"content":{"rendered":"
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Small businesses already navigating the costs and chaos of tariffs must now also contend\u00a0 with the effects of the war in Iran.<\/p>\n

Read more California: State Farm violated law in handling of L.A. fire insurance claims<\/a><\/p>\n

\u201cIt just feels like things keep getting piled on top,\u201d said Nichole MacDonald, owner of a San Diego business that sells women\u2019s bags. \u201cNot just for businesses, but for consumers. And what is a business without consumers?\u201d<\/p>\n

Since her customers are feeling financial pain just like her, they\u2019re spending less money on discretionary items, she said. If they are still buying, they\u2019re choosing denim bags over leather because they\u2019re cheaper.\u00a0<\/p>\n

\u201cEach level of pressure, economic uncertainty and tightening of the purse strings impacts people\u2019s decisions on spending,\u201d the Sash Bag owner said.<\/p>\n

Other small retailers in the area tell similar stories of increased costs and having to adjust to continued tariff uncertainty in the wake of the Supreme Court decision that invalidated the bulk\u00a0 of President Donald Trump\u2019s wide-ranging tariffs. In some cases, such as if they imported their own goods, they might be able to apply for tariff refunds, though the timeline for receiving refunds is unclear. The president also imposed new tariffs based on a different law, against which California and other states have filed a lawsuit.<\/p>\n

Meanwhile, everyone has been hit with higher shipping costs because fuel prices have gone up. The average price for regular unleaded gas in the state is $5.55, up from $4.79 a year ago, according to AAA. The national average is $4.11 vs. $3.15 a year ago. The spikes in gas prices caused inflation to rise in March. Consumer confidence is at a record low.<\/p>\n

Higher prices hit small businesses \u2014 defined as those with fewer than 500 employees \u2014 harder than big ones, and some wonder how long they can survive. That\u2019s bad news for the state, whose small businesses create millions of new jobs a year and lately have been responsible for 99% of net new jobs, according to the California Office of the Small Business Advocate.<\/p>\n

Lost sales, staff and more<\/h2>\n

MacDonald, whose business brings in six figures a month, said she saw her 2025 sales drop by up to 50% compared with the previous year. Because of tariffs, she stopped manufacturing products in China and has shifted entirely to India. She went from 11 staff members to three. And because she spent tens of thousands of dollars on tariffs, she said she didn\u2019t have money to bring in inventory for the holidays.<\/p>\n

She uses brokers to import her offerings, so she\u2019s waiting to hear from them about possible tariff refunds. But even if she does eventually receive refunds, she said the damage has been done: \u201cThat money could\u2019ve gone to personnel or to growth, instead of going to a tax.\u201d<\/p>\n

The president\u2019s policies have had a global impact. Last week, MacDonald\u2019s longtime manufacturing partner in India informed her that costs for raw material have gone up 25%, so that will mean higher costs for new production. After increasing prices about 10% last year, she will probably have to raise them again because she is working on thin margins, she said.<\/p>\n

The top executive at the Port of Long Beach, one of the nation\u2019s biggest ports, recently talked about higher costs being passed on to small businesses and consumers.<\/p>\n

\u201cFor a while, shippers absorbed rising costs from fuel spikes to last year\u2019s \u2018Liberation Day\u2019 tariffs,\u201d said Noel Hacegaba, chief executive of the Port of Long Beach, during a media briefing earlier this month. \u201cThat\u2019s no longer the case. Today, those costs are being passed along across the board. We\u2019re seeing new surcharges and higher rates.\u201d<\/p>\n

He said major shippers are instituting fuel surcharges, and adjusting how they move cargo. Amazon is adding a 3.5% third-party seller surcharge for fuel and logistics. The U.S. Postal Service is planning a temporary 8% surcharge, and UPS and FedEx also have raised their surcharges.<\/p>\n

Hacegaba was joined by Jonathan Gold, vice president at National Retail Federation, who said the nation\u2019s small retailers are seeing a disproportionate impact. \u201cSmall businesses in particular don\u2019t have the ability to absorb cost increases and typically have to pass those along to the end consumer,\u201d Gold said.<\/p>\n

\u2018We can only charge so much\u2019<\/h2>\n

But small retailers don\u2019t want to drive their loyal customers away.<\/p>\n

Rema Abedkader is feeling the squeeze all around, with higher shipping costs being the latest pain point, but she hesitates to pass along the costs to her shoppers. The designer of women\u2019s clothing said she does not want to raise prices because it will just deter those who are still spending.\u00a0<\/p>\n

\u201cWe can only charge so much, so we\u2019re having to eat that cost again,\u201d she said.\u00a0<\/p>\n

Abedkader, who makes her eponymous REMA clothing brand in the San Diego area but buys imported fabric from Los Angeles-based companies, said she had to cut back on production by about 30% last year, which meant fewer sales. This year, she has had to reduce production by about 50%.<\/p>\n

Her decreased business has had a widespread effect on her local ecosystem, all of whom are small business owners themselves.\u00a0<\/p>\n

Read more GM just paid a record penalty for breaking California privacy law<\/a><\/p>\n

\u201cWhen I\u2019m not producing, there\u2019s no work for my sewer, pattern maker and cutter,\u201d she said. That causes a vicious cycle: \u201cMy manufacturer had to get a second job, so our business had to be put on the back burner.\u201d\u00a0<\/p>\n

Abedkader said she\u2019s working four times harder and is having to get creative with marketing and by doing wholesale locally.\u00a0<\/p>\n

\u201cIf the government doesn\u2019t do something for small business, a lot of us are going to be going out of business very soon,\u201d she said.\u00a0<\/p>\n

Like Abedkader, women\u2019s apparel designer and maker Jennafer Grace Carter knows fabric brokers and importers in the Los Angeles area who have shut down because of tariff costs.\u00a0\u00a0<\/p>\n

The Trump administration\u2019s immigration policies have also affected her business. Carter, who uses imported materials but makes her clothing domestically, said a lot of people were afraid to come to work. One shop that had 25 people sewing now sees less than half of them coming to work, she said, adding that the workers are \u201chere legally but look a certain way\u201d so they are scared.<\/p>\n

Her handmade Jennafer Grace brand has had to scale back on styles to adjust to that shift, she said.\u00a0<\/p>\n

The bottom line is that Carter is dealing with \u201cless labor force, (fewer) materials and higher costs,\u201d she said. She has raised her prices only incrementally, because people won\u2019t buy if a business changes prices too drastically, she said.<\/p>\n

Carter recently returned to California from direct-to-consumer events in Las Vegas and Scottsdale, Ariz. The U.S.-Israeli war in Iran has not only affected her shipping costs, it has also raised her travel costs. Her customers were in the same boat. She heard some attendees talking about how \u201cit was so expensive to get here\u2026 I wanted to shop more.\u201d<\/p>\n

Higher costs\u2019 long-term impact<\/h2>\n

The pain of higher costs seems unlikely to go away anytime soon. For one thing, the uncertainty continues.\u00a0<\/p>\n

\u201cWhether it be on shores around the world or right here at home with erratic policy, it makes it very difficult for business people to plan,\u201d said Gene Seroka, executive director of the Port of Los Angeles, during a media briefing this month.<\/p>\n

Even those whose businesses have an opportunity to benefit from what\u2019s going on are expressing pessimism.\u00a0<\/p>\n

\u201cIt\u2019s going to be harder and harder for small businesses,\u201d said Ellie Rose, owner of Calibaja Manufacturing, which contracts with U.S. businesses to make their products in Mexico. Those businesses avoid import tariffs because most products made in Mexico are still governed by the United States-Mexico-Canada Agreement \u2014 although the free trade deal is being reconsidered.<\/p>\n

Rose said the small business owners she speaks with are seeing growing challenges. It\u2019s taking a lot longer than before to get their products to the United States, she said \u2014 100 to 165 days on a ship vs. the 30 to 60 days it used to take.<\/p>\n

\u201cThat\u2019s components, finished goods, whatever you need coming from Asia,\u201d she said. \u201cIt\u2019s going to slow everything down and cost more.\u201d<\/p>\n

And if or when fuel prices come back down, she doubts businesses will lower their prices because they\u2019ve had to bear increased costs for the past couple of years. That\u2019s going to affect innovation, Rose said: \u201cDown the line this is going to be more of a problem for everybody.\u201d<\/p>\n

Read more Why getting more California students into top UCs carries a big cost to taxpayers<\/a><\/p>\n<\/div>\n


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