Small, independent businesses across the US are struggling to survive due to a combination of rising costs, tariffs, and high interest rates, leading to significant job losses.
Economic Headwinds Impacting Main Street Businesses
Independent shop owners report immense financial pressure. Shirley Modlin, owner of a Virginia manufacturing business, cited component delays and price hikes—some reaching 400%—as major threats, stating, "I am trying to stay alive." Similarly, Trevor Frampton, who runs a pet supply store in California, noted that cash-strapped consumers are forcing him to consider layoffs for the first time in a decade.
These small enterprises are grappling with multiple cost increases, including:
- Tariffs on goods
- High interest rates
- Expensive health insurance
- Surging energy costs
Job Losses in Small Business Sector
A new analysis from the US Congress Joint Economic Committee indicates a worrying trend: small businesses with fewer than ten employees have experienced job cuts for thirteen consecutive months. This contrasts with earlier optimism surrounding small business growth.
Key employment data points include:
- Employment at these small shops dropped by 292,200 jobs in 2025 alone, according to the analysis based on the Intuit QuickBooks Small Business Index.
- This represents a fourfold increase in job cuts compared to 2020 levels.
- Conversely, a different metric tracking slightly larger businesses (1–19 employees) showed an increase of 526,000 jobs last year, according to ADP.
Policy Context and Industry Strain
President Trump has previously emphasized tax relief and deregulation as catalysts for small business growth, calling them the "lifeblood of the American economy." While some industry leaders, like Jaja Chen, noted the benefit of tax provisions for restaurants, they also highlighted that low profit margins make businesses extremely vulnerable to inflation and tariffs.
Economists suggest that when faced with shocks like tariffs, small firms have limited options: absorb the cost, raise prices, or reduce staff. Joe Brusuelas, a chief US economist, noted that the combination of these actions often results in higher inflation and rising unemployment.
Entrepreneurial Activity vs. Operational Strain
Despite the economic headwinds, entrepreneurial activity remains visible. Business applications totaled nearly 492,000 in March, and entrepreneurs filed 1.56 million business applications between November and January, marking a high point since at least 2004.
However, the strain is evident across sectors. Rachel Klein, a studio owner, cited rising costs for everything from food to transportation, while Modlin expressed frustration with the "unpredictability and tariff volatility," urging an end to what she called "game-playing."
