Small businesses grapple with tariff-induced supply chain challenges

It’s no secret that major retailers like Walmart and Amazon are struggling to adjust to the reality of tariffs, but it hasn’t been a picnic for small businesses, either.

Nearly two-thirds (63%) of small- and medium-sized businesses (SMBs) say that tariffs have had an impact on their operations, according to a new report from Netstock, which makes software for supply chain planning. Among those feeling the tariff pinch, 44% said they’d absorb the costs rather than risk out-of-stocks by purchasing less inventory, or losing customers by passing costs on to them.

Netstock defines SMBs as companies with less than $250 million in annual revenue, and executives at those companies are, naturally, looking closer to home for suppliers thanks to tariffs. While 31% said they preferred offshore suppliers over domestic ones in 2024, that dropped to 28% this year.

One hedge against tariffs has been to stock up before the tariffs kicked in, and this year 55% of SMBs said more than one-fifth of their inventory was “excess stock” (meaning in excess of forecasted demand), up from 48% last year.

But there’s a risk to that extra inventory. When it comes to the ominously named “dead stock”— inventory that’s been on hand for more than a year—17% said that more than one-tenth of their inventory was dead stock, up from 12% in 2024.

Fewer SMBs are likely to rely on credit to purchase inventory these days, too, falling from 53% in 2024 to 47% this year.

A July survey by market research firm Savanta found that just 26% of small business owners had a high level of confidence in how the US government was handling trade policy, while 33% had low confidence.

It will come as no surprise that small business owners who were Democrats had a dimmer view, with more than half (52%) saying they had low confidence in the current administration’s handling of trade policy, compared to just 14% of Republican small business owners.