Tariff Impact on Small Business 2026: Ohio and Texas Owners Face Hard Choices

Ron Bridges runs a small manufacturing company in Milford, Ohio. A 50% tariff increase on his imported components would make his products non-competitive. "My partners and I have invested everything in this company," Bridges told the U.S. Chamber of Commerce. "If the tariffs take effect, our business may not survive."

Eight hundred miles south in Austin, Texas, Amy Leinbach built Big Bee, Little Bee from scratch. "We were living the American dream until the new tariff policy hit," she said. "Even at 30%, the tariffs will be taking my entire income."

The tariff debate in Washington sounds abstract. For small manufacturers in Ohio and importers in Texas, it's the difference between staying open and closing up.

The $202 Billion Number

The U.S. Chamber of Commerce calculates that small businesses face a $202 billion annual tariff tax under current policy. That figure comes from applying tariff rates to the $868 billion worth of goods imported by 236,045 small business importers in 2023---the most recent Census Bureau data available.

These aren't multinational corporations. These are companies with fewer than 500 employees. They import components, materials, and finished goods that domestic suppliers cannot provide or cannot produce at competitive prices.

The math is straightforward. The impact is devastating.

Which Industries Bear the Brunt

Manufacturing businesses face particular pressure. The Small Business Index for Q1 2026 shows manufacturing companies are more likely than those in retail and professional services to have added staff in the past year---27% versus 11-12%. But tariff costs erode those gains.

Israel Maynard, COO of DIGGS, a company that manufactures high-end dog crates in China, has watched his tariff bill climb from $2,000 to $25,000 per shipment. The tariff rate on his products jumped from 3.4% in 2017 to 73.4% today.

"We've had to have some very uncomfortable conversations with our key partners," Maynard said. His company reduced headcount, increased prices twice, delayed expansion plans, and consolidated warehouses---all direct results of tariff costs.

Small Business Index Shows Declining Confidence

The U.S. Chamber of Commerce Small Business Index sits at 67.0 for Q1 2026, down from 68.4 last quarter. That decline masks more troubling numbers beneath the surface.

Only 28% of small business owners say the U.S. economy is in good health---a 10-percentage-point drop from Q4 2025. Meanwhile, 53% cite inflation as their top challenge, up from 45% last quarter. Inflation has ranked as the top concern for 17 consecutive quarters.

The cash flow picture is deteriorating. While 72% of small businesses remain comfortable with their cash flow, only 20% describe themselves as "very comfortable"---down from 24% last quarter and 31% in Q3 2025.

Investment and hiring expectations are pulling back. Just 37% expect to increase investment in the next year (down from 44%). Only 30% anticipate hiring more staff---a 12-percentage-point drop from the previous quarter.

The Consumer Price Pass-Through

Small businesses that import face an impossible calculation. Absorb the cost and eliminate profit margins, or pass it along and risk losing customers to larger competitors with deeper pockets.

Sari Wiaz, president of Baby Paper in Glenview, Illinois, confronted a 30% cost increase on her products overnight. "A 30% increase in my cost of goods. How is a small business supposed to survive that?" she asked. "Every option is a no-win."

Ginger Price, founder of Dr. Ginger's Healthcare Products in Phoenix, faced a $9,983 tariff on a $5,000 order of bamboo lip gloss tubes. "I will have to take out a loan to pay this extra expense," Price said.

The Supply Chain Problem

Not all imports can shift to domestic sources. Some materials simply cannot be produced in the United States at any price.

Pete Barlie, president of Daniel Paul Chairs in Tennessee, put it plainly: "How can we determine both cost and whether the materials will even be available?"

Lynnette Stokes, co-owner of Stokes Robotics in Missouri, had $200,000 of product already sold to customers when she learned of an additional $168,000 tariff. "If this tariff stays, we could be put out of business due to decreased demand," Stokes said. "Our 10 employees will be out of a job."

Regional Impact: Ohio and Texas

The Chamber of Commerce compiled stories from small business owners in all 50 states. Ohio and Texas reveal distinct but equally serious challenges.

Ohio represents manufacturing states where companies rely on imported components to finish products domestically. Ron Bridges' M4 Knick LLC faces the survival question. Amber Hawkins of Your Computer Needs of Toledo has raised prices and expects to raise them again.

Texas shows the importer state dilemma. Amy Leinbach's business "was living the American dream" before tariffs. David Sundin of Engineered Fluids in Tyler watched Australian customers tell him to establish manufacturing in Australia or Canada---a direct blow to American exporters.

Kad Seshu Bharadwaj of Windson USA in Boiling noted an irony: "We proudly manufacture in the U.S. However, some of our essential raw materials---such as castor oil and its derivatives---are not produced domestically."

What Business Owners Want

The quotes are consistent across industries and geographies. Business owners want predictability.

"It's not just the cost, but the uncertainty that it creates," said Anna Peterson, founder of Zenimal in California. "Tariffs force an impossible choice."

Neil Bradley, executive vice president at the U.S. Chamber of Commerce, notes that small businesses have the fewest resources to absorb sudden cost increases or pivot supply chains. "These are not choices business owners were making a year ago," Bradley wrote. "They are responding to policy shifts that arrived with little warning."

The Data in Context

The 53% of small businesses citing inflation as their top concern reflects the cumulative impact of supply chain disruptions, labor costs, and tariff-driven price increases. But the drop in confidence about the broader economy---from 38% to 28% in a single quarter---signals that owners see trouble ahead.

Manufacturing businesses remain more likely to report good health and cash flow comfort than service industries. That resilience, however, depends on access to imported materials at predictable costs. When steel prices double because of a 50% tariff, that resilience dissolves.

Frequently Asked Questions

How are tariffs affecting small businesses in 2026?

Tariffs cost small businesses an estimated $202 billion annually. The Q1 2026 Small Business Index shows only 28% believe the U.S. economy is in good health, down 10 percentage points from the previous quarter. Business owners report reduced investment, frozen hiring, and, in some cases, closure.

Which industries are hardest hit by new tariffs?

Manufacturing businesses face the steepest challenges because they depend on imported components and raw materials. Companies importing from China face tariffs as high as 55-73% on finished goods. Steel and aluminum tariffs of 50% affect domestic manufacturers who cannot source those materials elsewhere.

What do small business owners say about tariff policy?

Owners consistently cite uncertainty as the primary concern. Story after story mentions orders placed months ago that now carry surprise tariff bills. "The uncertainty is insanity," said Matt Katzman of Velocity Sleep in Connecticut. "If nothing is done soon we will have to shut down our business."

How are businesses passing on tariff costs to consumers?

Many are raising prices. The Chamber's reporting shows price increases of 10-30% are common. Some businesses absorb costs until profit margins disappear. Others take on debt to pay tariff bills. All three paths lead to the same place: financial strain.

What businesses are relocating due to tariffs?

International customers are asking American manufacturers to relocate production. David Sundin of Engineered Fluids in Texas was told by Australian clients to establish manufacturing abroad or lose their business. Some companies are exploring production in Vietnam, Thailand, or other countries to avoid China tariffs---only to face tariff uncertainty there as well.

Can small businesses shift to domestic suppliers?

For many products, no domestic alternative exists. Toddler toy manufacturer The Queen's Treasures in New York noted that the U.S. lacks factories for the "hand-crafted production deficit" the toy industry needs. Electronics components, certain textiles, and specialty materials cannot be sourced domestically at any price.

How long do tariffs typically last?

Tariff policy shifts with each administration. Businesses ordering inventory 6-12 months ahead cannot predict what rates will apply when goods arrive. DIGGS watched its effective tariff rate climb from 3.4% to 73.4% over eight years as different policies layered on top of each other.

What relief options exist for small businesses?

The U.S. Chamber advocates for tariff relief programs and exemptions. Some businesses qualify for specific tariff exclusions, but the process is bureaucratic and offers no guarantee. Recent legal rulings on IEPA tariffs have opened refund possibilities for some importers, though the process remains uncertain.