Tariffs and Small Business - Our Experiences So Far

As I write this, it is May of 2026. The Supreme Court ruled tariffs illegal, so problem solved right? Well, no, not exactly.

Let me back up a bit and explain how we got here and how the shop has been impacted by tariffs. We import products directly from Denmark, Spain, France, Britain, Australia, and our friends to the north in Canada. Most of these accounts predate the tariffs. When the tariffs came along, I had to decide if I was going to discontinue these yarns or pay more for them. This brought up a lot of questions. How long will the tariffs last? They were changing so often it was hard to tell. Can I afford to pay the higher prices? Will my customers pay higher prices? Especially given that they are paying higher prices for everything else as well. What will this instability do to foreign currencies? I pay in Euros, Danish Kroners, Australian Dollars, etc. and they fluctuate depending on market forces. US Dollars do too for that matter. At any moment in time my price for buying them can go up or down depending on all of these things. Now add tariffs and it gets a lot tougher.

So do I discontinue yarns I like well enough to go to extra effort to import? Is that how I want to choose what I carry in my store? A lot of thought and consideration goes into what we carry, into finding the right balance of yarn types, weights, fiber content, and yarn construction. Each yarn helps to strike a balance of diversity, affordability, and choice. It would mean not carrying beloved yarns that do very well for us and leaving us with many hard to fill gaps.

The only option was to try to find a way to keep these yarns without raising the prices much, if at all. I chose to pass these extra cost through without any mark-up and let any extra costs cut into our margins. This is a decision that many small businesses chose. We all hoped that this would pass and soon. The news would be hopeful, then pessimistic, then hopeful again. It was and still is a rollercoaster ride.

Another wrinkle popped up. Customers and Border Protection (CPB) suddenly had a new role in assessing all these shipments. Vendors abroad weren't prepared, didn't know what information to provide for CPB to ease things through customs. CPB didn't know what was expected of them. What did they need to do now and how were they to do it? Shippers like FedEx, UPS, and USPS also had a new role. They had to pay these tariffs and then collect them from importers like me. All this led to chaos. The shipper is chosen by the vendor not by me so I need to work with all of them which takes a lot of time. Time, including the time required to learn new skill sets, is not something small business owners have in abundance. I needed professional help.

Enter the import broker. I hired a local company to help me with the import process. This requires a fee for each shipment, a bond to ensure that I will pay the tariffs for the product I have already bought and paid for (money I don't get back), and a ton more paperwork. I now have an Importer of Record (IOR) number that will show all this if it is provided to the shipper. My vendors have been great about providing the information now that we know what is needed. This information is: HS codes which define the type of product and determine what tariffs if any apply and also define the country of origin, the wholesale price which determines the amount of the tariffs as a percentage of the wholesale price, my shipping and billing address, my IOR number, and my import broker (name, address, and phone number). 

Problem solved right? 

You guessed right, the problem was far from solved. First, it took some time to understand what the import broker does and what to expect from them. They were unaccustomed to working with small businesses that had never used an import broker before and failed to explain the process and set reasonable expectations. Foolishly, I assumed that they would handle it all and the process would be easy now. Over time I came to realize that importing can work out one of three ways.

1. The shipper notifies my import broker right away, I pay the tariffs and importer fees to my import broker, and everything goes smoothly and as intended.
2. The shipper decides to do the work of my import broker and directly requests the tariffs and importer fees from me, and everything goes smoothly and as intended.
3. The shipper decides to do the work of my import broker and things sit around in a random import warehouse somewhere for weeks to months before they figure out how to directly request the tariffs and importer fees. As soon I pay them I receive my shipment (usually 3-4 boxes) in multiple deliveries, days to weeks apart. Note that if the shipper initiates the process, my import broker can't help me; the importer has been defined as the shipper.

Having an import broker only helps with option 1. If all my shipments came via option 2, I wouldn't need the import broker at all. Unfortunately, option 3 seems to be most common. There isn't an easy fix for option 3. If the shipper fails to read the information the shipper provides (taped to each box next to the shipping label) I'm stuck. They are hard to reach. I rarely know who to contact or how to contact them. It is never the same person or even facility, even if the shipper is the same. I can do little more than refresh the tracking information and hope that it will be delivered soon.

For instance, I ordered Knitting for Olive (ships from Denmark) on March 30th and paid for my order immediately using an international bank transfer (Wise, highly recommend them). On April 2nd my order reached the shipper's US warehouse to start the clearance process. It then sat in the warehouse until May 6th before it passed through their customs clearance. We received one box on May 8th, two boxes on May 11th, and the final box on May 21st nearly 2 months after I had paid for my order. 

I wish I could say this is unusual. Sadly, it is not. We ordered Biches et Buches Le Petit Lambswool and Le Gros Lambswool in time to receive it before the Bay Area Yarn Crawl this year and it was about 2 months in transit. Needless to say, it was not here for the Crawl.

This is still happening after the tariffs were ruled illegal by the Supreme Court. Instead of tariffs that vary by country, flat 10% tariffs have been imposed. They are supposed to last no longer than 150 days unless Congress ratifies them. The 150 days expires on July 24th. We shall see what Congress chooses to do. There have been lawsuits won and now on appeal with a limited injunction that does not cover us.

Recently, the Supreme Court directed the federal government to reimburse importers for tariffs paid. The set up a portal through which I can request reimbursement. I either need to spend my time learning anther convoluted, bureaucratic system or pay someone else to do it. Will I get the money back? Does the federal government have the money to reimburse importers? Am I going to pay in my time or money for nothing or to get pennies on the dollar? It isn't clear.

Did I mention that I can't deduct tariffs as an expense? I think that's right. My tax preparer thinks that is the case. It is hard to find reliable guidance on the issue. We are still trying to figure it out. This shop has paid a significant amount of money in tariffs and I will not be reimbursed for any services I have used to help me deal with tariffs. At least the money I pay my tax preparer to research the issue is deductible. 

You may be wondering why I import yarn instead of buying domestic yarn. Wasn't that the point of the tariffs to encourage domestic production? This is not an industry where that is likely to happen, certainly not enough to meet demand. Domestic yarn exists and we always look for it and are happy to carry it. There just isn't much and it tends to be a good bit more expensive than imported yarn. US mills are overbooked as it is, there isn't more capacity and setting up new mills is too expensive. Even if we were able to set up more mills, we don't grow enough wool to operate more mills. The wool would need to be imported. 

The other option is to work with yarn distributors who do the importing for us. We do. Unfortunately, they keep getting bought up by venture equity firms. Knitting, crocheting, and related crafts have become so popular that it has attracted the interest of people who are only interested in profit. They don't care about wool, yarn, or what types of yarn crafters like. This includes some larger "indie dyers" that were bought by large yarn stores or distributors that were then bought by venture equity firms. Venture equity firms make decisions based on what will bring the biggest profit. If something isn't working for their shareholders, they will liquidate it. A lesson we all learned from the fall of JoAnn Fabrics. I am actively looking for yarn and craft businesses owned by crafters, by people who make products they know and believe in. I am moving away from these distributors. That leaves me with limited options in the domestic market.

I don't write this just to rant. I get asked about tariffs and thought you might be interested in one very small business' experiences with them.

Have questions? Feel free to ask them in the comments.