‘It’s Covid 2.0’: Mom-and-pop shops are already feeling the squeeze of Trump’s tariff wars

Bettencourt expects to see similar surcharges from the rest of her vendors looking ahead. In the meantime, Bettencourt said she’s taking it one day at a time. “Once we’re still here next year, then I’ll be happy,” she said. “The last few years have been really, really challenging.”

For small brick-and-mortar retailers like Klem’s, which sells everything from work boots to lawn mowers, higher costs mean tough choices: raise prices and risk losing customers, or absorb the cost and take a hit to already-thin margins. As President Donald Trump’s sweeping tariffs come into force, independent store owners across the country are scrambling to figure out what it means for their bottom lines — and how to keep customers coming through the door.

Trump recently enacted a 10% tariff on imported goods from China and 25% duties on all steel and aluminum imports. Retailers may also be on the hook for two separate 25% tariffs on imported Mexican and Canadian goods, which have been delayed until early March. 

These measures could potentially curb consumer spending by as much as $78 billion a year, according to the National Retail Federation. 

Traditional brick-and-mortar retailers, especially independents, will bear the brunt of the impact because it’s generally more difficult for smaller companies to adjust their supply chains to avoid tariffs, according to Jonathan Gold, the NRF’s vp of supply chain and customs policy. Smaller players also can’t adjust prices as quickly as online retailers. 

“Especially for the small businesses, if they’ve got to raise their prices, there’s a potential they’re going to lose sales,” Gold said. “That has an impact on their business and their bottom line.”

Sarah McDonald, who co-owns Out There Outfitters, an outdoor retail shop in Wayne, Pennsylvania, has seen some of her top vendors, like activewear apparel brand Vuori, shifting supply chains in response to Trump’s tariffs — and that’s already having a negative impact on her business. 

“Several of our brands had warehouses in Mexico, and they’ve had to move everything back into the U.S.,” she said. “That means products are arriving at least a month late, which shortens our selling season.” For a business dependent on seasonal merchandise, this is a huge concern. 

For McDonald, the hurdles of running a small brick-and-mortar store only seem to grow year after year. Now, with Trump’s tariffs looming, small retailers are bracing for another financial gut punch. 

“It’s like Covid 2.0,” she said. “I don’t want to sound like doomsday, but do you feel a little beaten down? Yes.”

‘Cost prohibitive’ 

Brick-and-mortar stores have been struggling in recent years, and the pressure isn’t likely to ease up any time soon. Store closures surged in 2024 — reaching the highest level since the pandemic — and projections indicate an even sharper increase this year.

Estimates from Coresight Research predict 15,000 retail locations could shut down this year — more than double the 7,325 closures seen in 2024. That number marked the worst year for store closings since 2020, when nearly 10,000 locations shuttered. The imbalance between closures and openings led to a net loss of 1,355 stores last year.

Many small retailers that spoke to Modern Retail for this story said they will likely have to raise their prices to absorb the cost of Trump’s tariffs. 

“Since Covid, prices have risen 20-25%, and things are already harder to source,” said Sarah White, the owner of Broadway Silk, an 85-year-old, family-run fabric and gift store in the Astoria, Queens neighborhood of New York City. “With tariffs, wholesale prices will go up even more.” 

White has traditionally worked with independent and domestic artisans, but she knows that even their raw materials often come from overseas, making her business vulnerable to price increases at every level of the supply chain.

To get ahead of tariffs, White recently made a major purchasing decision: She increased her spring inventory buy by 50%. “I bought a lot more than I normally would to stock up before prices go up,” she said. “But after that, it’s just going to be a matter of passing some of those costs on to customers. There’s really no way around it.”

McDonald has taken the opposite approach. Instead of snapping up goods while they’re affordable, she is keeping her inventory lean. She remembers what it was like when inventory levels surged during the pandemic, forcing retailers to heavily discount unwanted goods, which eroded profit margins. 

Still, the uncertainty around tariff policies is making long-term planning difficult. For many, the best they can do is prepare for rising costs, adjust pricing strategies and hope that customers will be willing to shoulder at least some of the burden. That may be easier said than done given that U.S. consumer sentiment in February plunged to a 15-month low over tariff fears.

Pacers Running, a local chain in Washington D.C. that sells footwear, sources most of its goods from Vietnam and Korea. But the company’s CEO Kathy Dalby is still worried about how consumer pullback because of tariffs and inflation could hurt sales. It doesn’t help that D.C. is disproportionately impacted by Trump’s sweeping layoffs of federal employees, which has pushed up joblessness in the city. 

Pacers is already seeing a decline in conversion rates, with a 27% drop in the current quarter compared to the prior quarter, which she said could be due to the uncertain economic climate. 

Amy Rutherford, who owns a trio of shops in Alexandria, Virginia, including Red Barn Mercantile, Penny Post and Pippin Toy Co., said she opts for American-made products whenever possible. But that’s not always an option for her customers. More than two-thirds of small businesses in the U.S. rely on imported products to keep their operations running, according to FedEx. 

“I would love for my customers to be willing to pay the price for American-made goods, but they’re just not willing to,” Rutherford said. “It just gets cost prohibitive for some people.”

Retail resilience 

Small retail store owners are ramping up community engagement efforts to give customers more value, even if they have to raise their prices. 

Dalby said Pacers Running hosts free community runs every week, attracting hundreds of participants. These events often include vendor product testing and social gatherings afterward. Dalby said she views these efforts as making “emotional deposits” with customers so they’ll be encouraged to spend their money with Pacers when they’re ready. 

Out There Outfitters’s shop is a five-minute drive from King of Prussia, the third-largest mall in the U.S. But rather than compete with major retailers on price, McDonald said she is focused on offering a curated selection and personalized consumer service. “We learned during Covid that our relationship with our community is our biggest asset,” she said. “We’re leaning into that now more than ever.”

She isn’t the only one. 

“I can roll a little bit easier with the punches,” Bettencourt said. “Once you’ve gone through Covid, and then supply chain disruptions and then inflation, you’re like, ‘OK, what are you throwing at me now?’