Donald Trump has never been one to understate his confidence in economic matters. But his latest pronouncement about small businesses facing tariff pressures has left many industry analysts scratching their heads.
"They'll be making so much money," the former president declared during a recent economic policy discussion, suggesting struggling small businesses won't need any relief from his proposed tariffs because they'll soon be swimming in profits.
It's a statement that lands somewhere between wildly optimistic and completely detached from ground-level business realities.
I've talked with dozens of small business owners over the past year, and lemme tell you—their margins don't exactly provide cushioning for major supply chain disruptions. When a typical Main Street operation runs on 3-5% margins (if they're lucky), even small cost increases can be devastating.
The former president's dismissive suggestion that Americans could simply make do with fewer "dolls or pencils" reveals a fundamental misunderstanding of how consumer markets actually function. People don't just shrug and stop buying essential goods when prices rise—they either absorb the costs (cutting back elsewhere) or find alternative sources.
"It's Economics 101," says Margaret Chen, who owns a small toy import business in Ohio. "When my costs go up 25% overnight, I can't just pass that all to customers without losing sales. And I certainly can't wait around for some promised future boom."
The timing question is what many experts find most troubling about Trump's casual dismissal of small business concerns.
See, even if domestic manufacturing eventually benefits from reduced foreign competition (a big "if"), there's that pesky interim period. The gap. The months or years when businesses must somehow survive with higher costs before any theoretical benefits materialize.
Having tracked the impact of the 2018 steel tariffs on manufacturing businesses, I saw firsthand how companies struggled during the transition. Many couldn't pass all costs to customers. Margins compressed. Some didn't make it through.
The Russell 2000, which tracks small-cap companies, tends to react nervously to these policy uncertainties—and with good reason. Small businesses simply lack the financial buffers of their larger counterparts.
What's particularly strange? Relief programs during transition periods could actually accelerate the very economic benefits tariffs are supposedly designed to create. By helping companies weather the adjustment, you increase the chances they'll successfully adapt rather than fold.
But that would require acknowledging that economic transitions involve real pain for real businesses—something that doesn't fit neatly into campaign promises.
For investors watching from the sidelines, this creates a mixed landscape. Some domestically-focused small businesses will indeed find opportunities in reduced foreign competition. Others will buckle under higher input costs and shrinking consumer spending power.
(The question of whether to short the Russell 2000 isn't entirely academic.)
Trump's economic vision has always prioritized bold narratives over nuanced implementation—a strategy that resonates with many voters tired of technocratic explanations. There's power in simplicity, in confidence.
But for the small business owner staring at next month's balance sheet... well, the promise of eventually "making so much money" offers little comfort when you're trying to make payroll on Friday.
In the high-stakes poker game of economic policy, Trump just pushed all his chips to the center of the table. The question is whether small businesses can afford to match his bet.
