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Trump Tariffs Cool Small Business Dealmaking

Trump Tariffs Cast a Chill on Small Business Dealmaking, Hitting Manufacturing Hardest

In the wake of President Donald Trump's renewed push for aggressive trade policies, small business owners across the United States are feeling the squeeze, particularly in the manufacturing sector. Proposed tariffs on imports from key trading partners like China, Mexico, and Canada are creating uncertainty that's cooling dealmaking activities, from mergers and acquisitions to expansions and partnerships. This shift comes at a time when small businesses, which form the backbone of the American economy, were just beginning to recover from previous economic disruptions. As tariffs threaten to raise costs and disrupt supply chains, entrepreneurs are hitting the pause button on growth-oriented deals, opting instead for caution in an increasingly unpredictable market.

The tariffs in question stem from Trump's campaign promises to protect American jobs and industries by imposing duties on a wide range of imported goods. Reports indicate that the administration is eyeing tariffs as high as 60% on Chinese imports and 25% on goods from Mexico and Canada, aimed at curbing what Trump calls "unfair trade practices." While these measures are intended to bolster domestic manufacturing, they are having the opposite effect on small businesses that rely on global supply chains. For many manufacturers, imported components are essential for keeping production costs low and maintaining competitiveness. The prospect of higher tariffs means increased expenses for raw materials, parts, and finished goods, which in turn erodes profit margins and makes ambitious deals less appealing.

Take, for instance, the case of Midwest-based manufacturers, a sector that's been a hotbed for small business dealmaking in recent years. According to industry analysts, mergers and acquisitions in manufacturing surged by over 15% in the post-pandemic recovery period, driven by low interest rates and a push for supply chain resilience. However, with tariffs looming, that momentum has stalled. A recent survey by the National Federation of Independent Business (NFIB) revealed that 42% of small manufacturers are delaying or canceling planned acquisitions due to tariff-related uncertainties. "It's like trying to build a house during a storm," said one anonymous owner of a Michigan auto parts supplier. "You don't know if the roof will hold, so why start now?"

This cooling effect isn't limited to outright deals; it extends to financing and investment as well. Banks and venture capitalists are becoming more risk-averse, scrutinizing loan applications and equity investments with an eye toward tariff impacts. For small businesses, which often lack the cash reserves of larger corporations, this means deferred expansions or halted R&D projects. In the manufacturing realm, where precision and timing are critical, such delays can cascade into lost market share. Experts point to historical precedents: during Trump's first term, similar tariff policies led to a 20% drop in small business investment in affected sectors, according to data from the Small Business Administration.

Beyond the numbers, the human element is palpable. Small business owners, many of whom are family-run operations, are grappling with tough decisions. In Ohio's industrial heartland, a cluster of metalworking firms has seen deal activity plummet. One entrepreneur, Sarah Jenkins, who runs a custom fabrication shop, shared her story: "We were in talks to acquire a smaller competitor to boost our capacity for electric vehicle components. But with tariffs potentially jacking up steel prices by 30%, the math just doesn't add up anymore." Jenkins' experience is emblematic of a broader trend where optimism is giving way to pragmatism. Instead of pursuing growth through deals, businesses are focusing on cost-cutting measures, such as renegotiating supplier contracts or exploring domestic alternatives—though these often come at a premium.

The ripple effects extend to related industries. Logistics and transportation firms, which support manufacturing supply chains, are also seeing a slowdown in partnerships. A report from BizBuySell, a leading marketplace for small business sales, noted a 18% decline in manufacturing business listings in the first half of 2025 compared to the previous year. This hesitation is fueled by fears of retaliatory tariffs from trading partners, which could further complicate exports. For U.S. manufacturers that sell abroad, the double whammy of higher import costs and restricted market access is a recipe for stagnation.

Economists are divided on the long-term implications. Proponents of the tariffs argue that they will eventually foster a renaissance in American manufacturing by encouraging reshoring and innovation. "Short-term pain for long-term gain," as Trump himself has phrased it. However, critics, including many small business advocates, warn that the policies disproportionately burden smaller players who can't absorb the shocks as easily as multinational corporations. "Big companies can lobby for exemptions or shift operations overseas; small businesses are stuck," noted Dr. Elena Ramirez, an economist at the Brookings Institution. Her research suggests that if tariffs are fully implemented, small business dealmaking could contract by up to 25% in manufacturing-heavy states like Pennsylvania, Wisconsin, and Texas.

Adding to the complexity is the political landscape. With midterm elections on the horizon, the tariff debate is intensifying. Democratic lawmakers are pushing back, proposing alternatives like targeted subsidies for domestic industries rather than broad tariffs. Meanwhile, Republican supporters are framing the policies as essential for national security and economic sovereignty. For small business owners caught in the crossfire, the uncertainty is paralyzing. "We're not politicians; we're just trying to keep the lights on," said Mark Thompson, owner of a textile mill in North Carolina, who recently shelved plans for a joint venture with a Canadian supplier.

Looking ahead, the trajectory of small business dealmaking will hinge on how these tariffs are rolled out. If exemptions are granted for critical inputs or if negotiations with trading partners yield concessions, the chill might thaw. But in the interim, manufacturing is bearing the brunt. Sectors like electronics, machinery, and apparel—already sensitive to global price fluctuations—are seeing the sharpest declines in M&A activity. A study by Deloitte highlighted that 55% of small manufacturers anticipate reduced profitability due to tariffs, prompting a reevaluation of strategic plans.

Despite the gloom, some silver linings exist. Innovative small businesses are pivoting toward tariff-proof strategies, such as investing in automation or sourcing from non-tariffed countries like Vietnam or India. Others are banding together through trade associations to advocate for relief. The U.S. Chamber of Commerce has launched initiatives to help small firms navigate the changes, offering resources on supply chain diversification and financial planning.

In conclusion, Trump's tariffs are reshaping the small business landscape in profound ways, with manufacturing at the epicenter of the slowdown. While the intent is to strengthen American industry, the immediate fallout is a cooling of dealmaking that could hinder economic growth. As small businesses adapt to this new reality, their resilience will be tested. Whether this leads to a more self-reliant economy or exacerbates existing challenges remains to be seen, but one thing is clear: the era of unchecked global integration is giving way to a more guarded approach, and small manufacturers are paying the price.

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Read the Full Forbes Article at:
[ https://www.forbes.com/sites/brandonkochkodin/2025/07/23/trump-tariffs-cool-small-business-dealmaking-particularly-in-manufacturing/ ]