Tariff Red Tape Hits Small Businesses Hardest
Small businesses are bearing the brunt of the administrative burden brought on by President Trump’s sweeping tariff increases. Despite promises to cut red tape, companies now face overwhelming documentation demands—especially when tracing origin details for seemingly simple products.
One business owner, David Zampierin of Idaho-based Zamp Racing, found himself tracking a shipment from China over uncertain trade deadlines. He resorted to storing goods in a bonded warehouse in South Korea while waiting to see if a temporary trade truce would hold—only to act quickly once it was extended. “I’ve been doing this for 40 years,” he says, “and it’s never been this complicated.”
Tariff expansion now covers items ranging from steel and aluminum to motorcycles and baby gear. Importers must supply detailed proofs of metal value, origin, and even processing locations. In some cases, products like deodorant or shampoo—free of metals—require documentation simply because they fall under the tariff regime. If aluminum sources can't be verified, Customs may assume it's Russian in origin and apply a punitive 200 percent rate.
Shannon Bryant of Trade-IQ describes these layered requirements as “death by a thousand papercuts.” Firms report that a single shipment’s entry can demand one to three hours of work, with complex metal-rich items sometimes requiring 10 or more hours—strains many small businesses can’t absorb.
Why Small Businesses Struggle More Than Big Players
Unlike larger corporations with dedicated trade teams and global sourcing networks, small businesses lack the flexibility to adapt quickly. They often cannot renegotiate contracts or shift supply lines in response to tariff changes. The recent shutdown of the “de minimis” $800 exemption has further increased paperwork and cost burdens.
Small business groups have voiced concerns over the unpredictability of the rules and the lack of resources to manage them. Many companies are forced to delay shipments or reroute them entirely due to unclear customs procedures or sudden policy shifts.
Compliance costs are piling up while profits shrink. Larger firms can scale up resources to adapt—smaller firms cannot. As a result, many small businesses are finding themselves overextended and at risk of falling out of compliance.
Growing Complexity and Legal Pressure
Adding to the confusion, a federal appeals court recently ruled that Trump’s country-specific tariffs broke the law. The White House has appealed to the Supreme Court and is seeking an expedited ruling.
With policy zigzags and inconsistent enforcement, many businesses are left unsure about which products will be affected and when. When rules change mid-shipment, companies are left in limbo, not knowing whether their goods qualify for exemptions or face unexpected charges.
Customs and Border Protection has increased its use of artificial intelligence and data analytics to track discrepancies in company reporting. This means even small inconsistencies can trigger compliance reviews, documentation requests, or monetary penalties.
What Small Businesses Can Do Now
Small businesses should:
Review and document all supplier information related to origin, composition, and value.
Build compliance time into their logistics timelines.
Use bonded warehouses and freight forwarders strategically to avoid premature importation during uncertain tariff periods.
Consult with trade compliance advisors to minimize risk and prepare for audits or inquiries.
As the trade landscape continues to shift, small businesses will need to stay agile—and informed—to survive the bureaucratic squeeze.
For help navigating complex compliance issues or to protect your business from tariff-related risk, contact Allcom Insurance at 866-277-9049 or email info@allcomins.com.