U.S. small businesses are sounding the alarm over the current tariff policies, warning that they are teetering on the brink of bankruptcy.
At a U.S. Senate Small Business & Entrepreneurship Committee hearing on Wednesday, Julie Robbins, CEO of audio effects gear maker EarthQuaker Devices, expressed her deep concerns. “If the situation persists, we will face the very real risk of bankruptcy,” Robbins said, highlighting that her company is already caught in a liquidity crisis.
Robbins explained that export sales account for 30% to 40% of their total revenue, with key markets including Europe, Australia, Canada, and Japan. “Our export business has been severely impacted by tariffs,” she said. “In recent months, export revenue has plummeted due to both anti-American sentiment and the global financial market volatility triggered by inconsistent U.S. tariff policies.”
She hopes the U.S. government will repeal these tariff measures to alleviate the operational pressures on small businesses like hers.
Walmart Warns of Price Increases
Meanwhile, retail giant Walmart reported mixed results for its fiscal first quarter ending April 30, narrowly missing revenue expectations. The company signaled that rising tariffs are likely to lead to higher prices for consumers.
While Walmart beat earnings estimates, CEO Doug McMillon warned that current tariff levels are “still too high” for Walmart or its suppliers to fully absorb. “We will do our best to keep our prices as low as possible,” McMillon said during an earnings call on Thursday. “But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins. The higher tariffs will result in higher prices.”
Walmart’s revenue for the quarter totaled $165.61 billion, up 2.5% from a year ago but slightly below analysts’ expectations of $165.84 billion. Adjusted earnings per share came in at 61 cents, beating forecasts. Net income declined to $4.49 billion from $5.10 billion a year earlier.
The company is facing pressures from tariffs on imports, particularly from the Chinese mainland, in categories like toys and electronics. Duties on products from countries like Costa Rica, Peru, and Colombia have also affected prices for items such as coffee, bananas, avocados, and roses.
“We’re wired for everyday low prices, but the magnitude of these increases is more than any retailer can absorb,” Walmart Chief Financial Officer John David Rainey told CNBC. “It’s more than any supplier can absorb. And so I’m concerned that consumers are going to start seeing higher prices.”
Rainey noted that the impact would likely start to show toward the end of May and become more noticeable in June. Walmart is working closely with suppliers to maintain value but admitted the speed and scale of cost increases are “a little bit unprecedented.”
According to Neil Saunders, managing director of GlobalData, Walmart’s comments could lead other retailers to justify their own price increases. “If a low-price-focused player like Walmart is putting up prices, it explains why others may follow suit,” Saunders said.
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U.S. small businesses 'at risk of bankruptcy' due to tariff policy
cgtn.com
