How tariffs are challenging purpose-driven small companies

Key takeaways

• Small and midsize businesses (SMBs) that feature sustainable, circular or ethical practices are especially vulnerable to tariff whiplash.
• In fact, rising costs and shifting pressures are forcing some to halt operations.
• Transparent, diversified supply chains have helped others adjust — but they can’t fully shield them from uncertainty.

The White House’s recent assault on global free trade poses unique challenges to the 99 percent of U.S. businesses that employ fewer than 500 workers. Rapidly reconfiguring supply chains squeeze all small businesses with slimmer margins, tighter production lines and more limited access to capital than large corporations. But unpredictable tariffs are especially problematic for the portion of the nation’s 33 million small businesses that are built atop nature-friendly credentials.

These SMBs are likely to have to slash sustainability initiatives and costs, according to Donatela Bellone, a former McKinsey consultant who is currently involved in a fashion-related startup. Companies that seek to buy materials from responsible facilities already face higher costs, and shoppers are reluctant to pay any additional premium, she added.

Unfortunately, brands that bake sustainability into their business models lack a unified lobby to send to Congress, but some are beginning to mobilize. “This doesn’t feel like the path to economic success for our country,” wrote Eagle Creek CEO and owner Travis Campbell to lawmakers on April 3, about anticipated tariffs of 32 percent on imports from Indonesia, its primary supplier. The outdoor gear brand, based in Steamboat Springs, Colorado, had already frozen hiring and lowered sales forecasts before the White House paused those tariffs for 90 days.

Meanwhile, the CEO of “circular bag” brand Day Owl, Ian Rosenberger, last week tried to rally fellow small business leaders. “The reality is that making our goods in the U.S. has been prohibitively expensive for a long time, making our bag prices unattainable for regular folks,” he wrote on LinkedIn.

Meanwhile, around the U.S.

Here’s what other American SMBs told Trellis about the impact tariffs are having on them.

Bambu Home

Demand has been strong for bamboo spoons and cutting boards, especially after a scare last fall related to chemicals in black plastic utensils, according to Jeffrey Delkin, president of Bambu Home. But tariffs forced the Portland, Oregon, company to halt production and shipment. “Right now, everybody is frozen,” he said. “We’re shifting gears in live time.”

The B Corporation is sitting on several months of inventory. “We don’t have a business model that works anymore,” Delkin said, describing the effect of the 145 percent levies against China, where the company sources bamboo certified by the Forest Stewardship Council.

“It’s a nice circular model where the manufacturer is within an hour or so of the material where it’s growing in the wild,” he said. “They are, of course for good reason, worried about their business as we are, too.”

“We’re an eco-friendly, small family business,” Delkin said. “What effect is this going to have other than we go out of business? We’re not going to make what we make in the United States. We won’t be able to find people to do it or material.”

Framework Computer

“First, I want to acknowledge that this sucks, for you, for us, and for our mission to remake consumer electronics,” Framework CEO Nirav Patel wrote in a recent blog post. The San Francisco startup —which manifests the principles of the right-to-repair movement with open source designs that include recycled materials — has updated its blog three times since, in response to the rapid-fire moves of the White House.

Framework had planned to temporarily absorb the additional tariffs on Taiwan, where most of its manufacturing happens, while charging U.S. customers more; migrating production to lower-tariff regions was already in process. Reworking all manufacturing, however, remains a “theoretical long-term solution,” Patel wrote.

Grey Matter Concepts

Grey Matter Concepts sells men’s knitted socks, base layers and T-shirts to DKNY, Wrangler and Walmart. The decade-old business, which employs roughly 100 people, blends organic, regenerated and virgin sources of cotton, and uses polyester derived from recycled plastic bottles. The brand’s factories are certified by third parties for sustainability and fair labor practices.

“Our attitude is, ‘Let’s just be patient here,’” said Robert Antoshak, vice president of global sourcing and development for the Manhattan company, which has that luxury because it sources materials from a variety of nations including India, China and the U.S. “Some people are really panicked because they are so exposed with China. But in our case, it’s more, ‘Let’s let things work their way out, and not hit the panic button.”

Dr. Bronner’s

For 77 years, Dr. Bronner’s has sold “All-in-One Magic” castile soaps in quirky, text-heavy bottles. Fair Trade-certified, they feature vegan and organic ingredients.

“Dr. Bronner’s Chief Operations Officer has reported that the tariffs, as they were originally announced, may cost us an estimated 3.4 margin points in terms of net revenue,” said Ryan Fletcher, vice president of public relations.

Based in Vista, California, the soapmaker employs more than 300 people, but it counts 17,487 smallholder farmers in its global supply chain. The company recently shared that it is declining to renew its B Corporation certification.

Fletcher said, “While our company is strong, and our mission and values are resilient, the proposed tariffs would be a setback for purpose-driven businesses and conscious consumers alike who seek to make the most ethical choices in their spending—which often means spending more to ensure fair wages, environmental stewardship, and general community well-being. Tariffs raise the cost of doing business even more for those of us who are already committed to the higher operating costs inherent in ethical business models.”

Ritual

Ritual ships “clean” multivitamins with transparent sourcing to shoppers and Target stores; its boron comes from Momence, Illinois, its vitamin E from Buenos Aires and its folate from Pisticci, Italy. The Culver City, California, company’s sourcing bona fides include Clean Label Project Certified, Climate Pledge Friendly and Non-GMO Project Verified.

According to Chief Impact Officer Lindsay Dahl it is too early to see what the tariffs will mean for business, but that should change soon enough.

“Built on a foundation of traceable ingredients, knowing our suppliers well, and where the ingredients are manufactured, has allowed us to begin to understand the impacts of tariffs much faster than if we were a traditional business that doesn’t have supply chain maps and manufacturing locations readily available,” she said. 

Bunch Bikes

Founded in 2017, the cargo bike maker employs 11 people in Denton, Texas. Though it manufactures in the U.S., Bunch sources components from China and Taiwan, so tariffs will mean each of its products will cost $1,100 more to make, according to a company blog post. As a result, the company plans to raise retail prices, which currently start at $6,100.

“In short, we will be ok; there are alternatives,” said Founder and CEO Aaron Powell. “And though they’ll take time to get up and running, it’s the uncertainty that is the real problem.”

TS Designs

The “Made in the U.S.” T-shirt screen printer, based in Burlington, North Carolina, uses natural fibers and original water-based inks. Its partner effort, Solid State Clothing, sells a $70 shirt of regionally grown cotton, dyed with marigolds.

Thhe Administration’s grant freeze halted the U.S. Department of Agriculture’s support of the climate-friendly practices used on President Eric Henry’s 4.5-acre farm, but that was just the beginning. “Now, we’re facing new tariffs,” Henry said.

Now, the B Corporation, founded in 1977, is holding up a hardware shipment from Europe while it assesses the tariff implications. “This equipment is essential to our broader plan to revitalize and localize apparel manufacturing,” Henry said. “Tariffs are immediate; building resilient supply chains takes time,” Henry said.

Though he believes a strategic application of levies can create positive change, “the on-again, off-again nature of these tariffs creates chaos.”