Small businesses across California are describing a double squeeze: tariffs and trade policy uncertainty are adding to their costs, and the widening effects of the Iran war are pushing up shipping and fuel-related charges, they said. Owners in San Diego and elsewhere described how higher logistics costs and economic caution are shaping what consumers buy, what products retailers stock and how far businesses can stretch thin margins.
Nichole MacDonald, who owns a San Diego business that sells women’s bags, said the pressures have built up in a way that is felt by both retailers and shoppers. “It just feels like things keep getting piled on top,” she said. MacDonald said her customers are feeling financial pain and spending less on discretionary items, and if they do buy, they are choosing cheaper options such as denim bags over leather. “Each level of pressure, economic uncertainty and tightening of the purse strings impacts people’s decisions on spending,” she said.
MacDonald and other small retailers described trying to adjust to tariff uncertainty in the wake of a Supreme Court decision that invalidated much of President Donald Trump’s wide-ranging tariffs. In some cases, she said, importers may be able to apply for tariff refunds, but the timeline for receiving them is unclear. MacDonald said she spent tens of thousands of dollars on tariffs, and that constrained her ability to bring in inventory for the holidays. She said she stopped manufacturing products in China and shifted entirely to India, and she reduced her staff from 11 employees to three.
MacDonald said she is waiting for guidance from brokers about whether tariff refunds are possible, but she said the damage is already done. “That money could’ve gone to personnel or to growth, instead of going to a tax,” she said. She also said the president’s policies have had a global impact on her suppliers: her longtime manufacturing partner in India told her that costs for raw materials have gone up 25%, which she said could require her to raise prices again after she increased them by about 10% last year.
Alongside tariff costs, small businesses described how higher shipping costs have emerged as fuel prices rise. The average price for regular unleaded gas in California is $5.55, up from $4.79 a year ago, according to AAA, with the national average at $4.11 compared with $3.15 a year ago. Owners said those costs show up not only in transportation but also in how shipping charges are structured, raising the overall price of getting goods into the state.
Noel Hacegaba, chief executive of the Port of Long Beach, described in a media briefing earlier this month how the burden is shifting. “For a while, shippers absorbed rising costs from fuel spikes to last year’s ‘Liberation Day’ tariffs,” Hacegaba said. “That’s no longer the case. Today, those costs are being passed along across the board. We’re seeing new surcharges and higher rates.” He said major shippers are instituting fuel surcharges and adjusting how they move cargo, including through additional charges cited by retailers and logistics providers such as Amazon, the U.S. Postal Service, and UPS and FedEx.
Other small retailers said they do not want to drive away loyal customers by raising prices. Rema Abedkader, a women’s clothing designer, said she is hesitant to pass along the costs and said, “We can only charge so much, so we’re having to eat that cost again.” Abedkader said she buys imported fabric from companies in Los Angeles and makes her products in San Diego, and that she cut back on production by about 30% last year, then reduced production again by about 50% this year.
Abedkader described how her reduced production affects the local ecosystem of other small business owners who support her business, including people who handle tasks such as pattern making and cutting. “When I’m not producing, there’s no work for my sewer, pattern maker and cutter,” she said. “My manufacturer had to get a second job, so our business had to be put on the back burner.” She said she is working four times harder while adapting marketing strategies and doing wholesale locally.
Abedkader and others said policy uncertainty also makes planning difficult even when businesses would like to invest in inventory or long-term contracts. Gene Seroka, executive director of the Port of Los Angeles, said during a media briefing this month that, “Whether it be on shores around the world or right here at home with erratic policy, it makes it very difficult for business people to plan.” As more companies try to manage costs, some supply-chain businesses and manufacturers described longer shipping times and slower movement of components and finished goods.
Ellie Rose, owner of Calibaja Manufacturing, described how import-related delays are compounding. Her company contracts with U.S. businesses to make products in Mexico, and she said those businesses avoid import tariffs because most Mexican-made products are governed by the United States-Mexico-Canada Agreement. She said the agreement is being reconsidered, however, and Rose said small business owners she speaks with are seeing expanding challenges including shipping times that now take 100 to 165 days on a ship compared with 30 to 60 days used to take. Rose said, “That’s components, finished goods, whatever you need coming from Asia,” and that the longer timelines “slow everything down and cost more.”
Rose also questioned whether prices would fall if fuel costs ease, saying businesses have had to bear increased costs for much of the past couple of years. “Down the line this is going to be more of a problem for everybody,” she said, describing the potential longer-term impact on innovation. Other small business owners echoed that concern, describing how increased costs are affecting both production decisions and consumer behavior, leaving many struggling to predict what comes next.