U.S. businesses from various industries are preparing for the economic fallout of President Donald Trump’s newly imposed tariffs on imports from China, Canada, and Mexico. The 25% tariffs on goods from Canada and Mexico, and 10% on Chinese goods, are expected to drive up inflation and impact businesses across the country.

The Economic Impact of Trump’s Tariffs on U.S. Businesses

The tariffs, which will go into effect on Tuesday, are poised to have widespread effects on U.S. businesses, ranging from small ice cream parlors to large medical supply companies. The Budget Lab at Yale University estimates that the average American household will lose between €965 and €1,160 in annual purchasing power due to these tariffs.

Gregory Daco, chief economist at EY, forecasts that inflation, which stood at 2.9% in December, will increase by 0.4 percentage points due to the tariffs. He also predicts a slowdown in the U.S. economy, with a contraction of 1.5% this year and 2.1% in 2026 as higher import costs dampen consumer spending and business investment.

For small businesses like Penny Ice Creamery in Santa Cruz, California, the tariffs will raise the cost of essential equipment such as refrigerators, freezers, and blenders, which are often imported from China. Co-owner Zach Davis fears that the new taxes will force his company to increase prices, despite the already strained economic climate.

Other industries, such as medical supply companies and women’s apparel vendors, are similarly concerned. Aeroflow Health, based in Asheville, North Carolina, imports over half of its supplies, including breast pumps, from Chinese manufacturers. The new tariffs are expected to either drive up costs or force the company to source cheaper, lower-quality products, ultimately passing higher costs onto consumers.

Wider Economic Concerns: Inflation and Supply Chain Disruptions

The impact of these tariffs is not limited to small businesses. The construction industry, which relies heavily on imported materials, faces inflationary pressures that could cause delays and increase prices as inventory supplies diminish. Additionally, industries like agriculture and produce distribution, where goods cannot be stockpiled, will see immediate price increases. In Nogales, Arizona, produce vendor Rod Sbragia expressed concern that the tariffs could disrupt the availability of fresh fruits and vegetables, driving up costs for consumers.

American farmers are also caught in the crossfire, as retaliatory tariffs from Canada, Mexico, and China could further strain their operations. Many farmers are hoping that the Trump administration will step in, as it did in the past, to provide financial relief if their sales and profits suffer due to retaliatory measures.