updated February 28, 2025
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What is happening here?
The Trump administration has announced trade tariffs with Canada, Mexico and China, with more tariffs being discussed with EU nations. While the impact of these tariffs are wide reaching to companies and consumers in the US, they are disproportionately unfair to small businesses who are already facing rising costs associated with running a business - like rent, shipping, and labor just to name a few.
What Mellow Monkey is doing
Mellow Monkey has been aggressively negotiating with suppliers to lock in pre-tariff prices not only for everyday merchandise it carries throughout the year, but also holiday merchandise that has traditionally been exempt from trade tariffs. At last check, over 80% of supplier orders are locked in at pre-tariff prices, which means we are able to insulate our customers from price increases in 2025. In addition, we continue to add US suppliers to our line-up and are also working with them to manage the impact trade tariffs are having on their pricing (due to their dependency on raw materials that are also subject to trade tariffs.) This allows us to continue to offer you the very competitive pricing you've come to expect from Mellow Monkey.
Mellow Monkey In The News
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-- Business Insider (paywall)
Tariffs explained in 5 Minutes
So how do tariffs impact a small business?
The one common misunderstanding about trade tariffs is who is actually paying the tariffs. When a US company imports products from a country where tariffs are in place, the US company who is doing the importing pays the tariffs. Not the exporter. and not the country they were exported from. So not Canada, Not Mexico and Not China. It is effectively a tax on products that someone in the US has to pay.
The US Importer then has to make a decision about whether to pass that cost onto retailers. In an economy that is viewed as having strong consumer confidence (where we are today), they usually do pass it along to the retailers.
Retail store owners have to make decisions about whether to absorb the cost by taking less profit or increase the price.
The reason small businesses are impacted disproportionately is that they don't have the buying and negotiating power to minimize the impact of tariffs that bigger businesses have.
If a small business makes the decision to absorb the increased costs by taking less profit, that could be a breaking point for the business, especially when considering many small businesses are operating on tight margins. The same could be true if a small business passes the costs on to its customers. The breaking point here is called, perceived value - that is , the price a product is perceived to be worth by a customer. Exceed that and a business gets stuck with overpriced inventory that they cannot sell.
Both of these scenarios could potentially force many small businesses to shutter- leaving the retail landscape even more homogenized than it already is.
So why not buy more US made goods?
Absolutely! Small businesses like Mellow Monkey have always sought out US made products to offer to their customers. The challenge in the gift and home decor category is that the breadth and variety of products offered by US made suppliers are dramatically less than products that are made overseas. They are also higher priced than comparable products sourced from overseas suppliers, so they're not accessible to every consumer.
US makers are impacted by tariffs too! The raw materials they use to make their products almost always come from overseas suppliers. This increases their costs, hence the costs of these products also go up!
How might this play out?
We don't know. The policy strategy of the administration is very unpredictable. In the near term, small businesses must employ strategies to buy merchandise that has already landed on us soil, to negotiate with suppliers who hopefully can push back on overseas manufacturing to lower their costs, and to ensure they have back-up suppliers they can lean on at a moment's notice. All of these strategies must also be weighed against the potential disruption in the supply chain, which could make the aforementioned options limited.
The big concern is what happens going into the holidays at the end of the year. If tariffs impact consumer spending at a time when small business makes the lion share of it's income, we might see many small businesses going out of business at the end of this year and going into Q1 of 2026.
- Howard Aspinwall, Owner, Mellow Monkey Gifts & Decor