The Tariff Reckoning: Lasting Costs for U.S. Businesses

How President Trump’s trade wars still shape local economies as courts weigh their legality.

When Donald Trump levied sweeping tariffs on foreign steel, aluminum, and Chinese imports during his first presidency in 2018, he reshaped American trade policy. What began as an emergency measure to “protect American industry” has calcified into a permanent restructuring of U.S. commerce, altering prices and supply chains. 

Since returning to office in January 2025, Mr. Trump has doubled down. His administration has layered staggering new duties on a range of imported goods and threatened tariff rates 30% or higher in response to retaliatory duties imposed on US imports. 

Now, the legality of that framework is under scrutiny. On August 29th, a federal appeals court ruled 7-4 that Mr. Trump exceeded his authority in imposing his global tariffs, many of which were enacted through the International Emergency Economics Power Act (IEEPA). That 1979 law granted the president broad powers to regulate financial transactions during national emergencies, but the court held that it did not confer the president explicit authority to levy taxes on nearly all U.S. imports. However, the appeals court put its ruling on hold until October 14th to give the Trump administration time to seek Supreme Court review. 

Mr. Trump defended tariffs as a blunt but necessary tool: by making imported goods more expensive, he argued, consumers would be incentivized to buy American-made goods, reducing trade deficits and restoring domestic manufacturing. Indeed, in sectors like steel manufacturing, his claims found some validation. The top five U.S. steel companies more than doubled their total annual investments from 1.5 billion to 4.2 billion dollars from 2017 to 2019. Companies have also announced job gains and wage increases. 

But the promised revivals have proven to be uneven. While certain American producers benefited, the tariffs also raised costs for businesses dependent on import inputs. 

According to CNN, in late June the American sportswear giant Nike forecasted that it would have to pay $1 billion in additional costs because of President Trump’s tariffs levied on China, Vietnam and Indonesia, where more than 70% of Nike’s products are manufactured. Nike has confirmed a price rise for its American customers. 

Multinational corporations like Nike can adjust by shifting production or absorbing some of the losses, but small and medium-sized businesses heavily reliant on imports often lack this level of flexibility. For these firms, the impact of recent tariffs has been particularly severe. Many report price hikes from suppliers and face difficult choices whether to absorb these costs or pass them on to customers at the risk of lost sales and competitiveness. 

In an interview with Ms. Yang, the manager of a Sichuan restaurant in Chinatown, New York, she explained that the rising cost of imported spices and specialty ingredients has forced them to shrink menus and absorb losses. “We can’t just swap out certain ingredients for something else,” she said. “Customers know the difference, so we take the hit ourselves.” Yang noted that many other restaurants nearby were also struggling to maintain their businesses under profit losses of more than one-third. Some owners also described stockpiling imported ingredients after rumors of higher duties circulated. “Every year we think we’ve adjusted,” said one owner, “and then another tariff or new rule comes along. We can’t plan two years out anymore.”

In the long run, tariffs have exposed the vulnerability of businesses, particularly small ones, to global economic policies. It remains to be seen whether these businesses can withstand this turbulence or whether they will be forced to make choices that will reshape their futures. The appeals court’s decision striking down Mr. Trump’s new tariffs does not resolve this uncertainty. For now, caught between the policies of the past and the unpredictability of what comes next, businesses must navigate a system in flux. Treasury secretary Scott Bessent also warns that the U.S. may be forced to issue massive refunds (totalling almost a trillion dollars) if the Supreme Court rules against the government, fueling further significant economic disruption. 

With so much in the air, one thing is certain: the real cost of tariffs is not only measured in dollars collected or refunded, but also in the uncertainty they leave behind—one that hinders investment, disrupts supply chains, and leaves small businesses in a perpetual state of reaction and readjustment rather than growth. Even if the Supreme Court overturns the new tariffs, the old ones remain, a stark reminder that protectionism has become a feature of American commerce. 

Tariffs were once pitched as temporary leverage in global disputes. Today, they have become a climate of instability that disturbs how local economies function. And until that uncertainty is resolved, local American businesses will continue to live in the shadows of these trade wars. 

Jessica Wu ‘27