Finding Opportunities in Tariffs Have Family Businesses Searching for Options, New Sourcing

By Pat Soldano, President of Family Enterprise USA 

There’s no playbook for what family-owned businesses face in navigating the new world of tariffs.

For those family-owned businesses in pest management having to pay an unexpected tariff bill, the best of bad options is to look for new opportunities and find openings for lowering costs.

As the cost of tariffs put the pinch on family businesses, leaders are also pursuing new product sourcing, finding new markets, raising prices, accepting lower profits, seeing fewer customers, and even advocating on Capitol Hill against the tariff program altogether.

In a recent poll among family businesses, Family Enterprise USA asked: “Are you currently affected by tariffs?”

The results were 54% said “Yes,” while 46% said “No.”

As for the future, when we asked: “Are you concerned about new tariffs affecting your business?”

The numbers rose to 64% saying “Yes,” and 36% saying “No.”

Every two weeks, the Census Bureau surveys 200,000 American businesses on prices.

The survey is finding manufacturers, wholesalers, and retailers increasingly paying higher prices for goods and services. The survey says they are “slowly passing those increases along to their customers.”

But what do leaders in other family-owned business say about the tariffs?

Family Businesses Speak Out

“The tariff policy would be more effective at boosting American industry if key raw materials were exempted from tariffs,” said Jonathan Thompson, Chief Executive Officer of 120-year-old Nielsen-Massey, a Chicago-area vanilla importer and family business. “It puts us at a cost disadvantage to our foreign competitors for some critical raw materials, like vanilla, that simply cannot be made in America at any commercially feasible scale,” Thompson said. “Ideally, US-based manufacturers like us would be able to acquire their raw materials with no tariff penalty so we can stay competitive at home and abroad.”

Rubber manufacturer, West American Rubber Company, based in Orange, Calif., sources its raw materials from around the world and forecasts substantial raw material costs through the end of the year, according to Timothy J. Hemstreet, President and Chief Executive Officer.

“In the second quarter, following Trump’s ‘Liberation Day,’ we had a significant increase in inquiries from customers for pricing on historically imported rubber commodity products and few select specialty items,” Hemstreet said. “Though we have received minimal incremental business that was re-shored due to tariff impact, I am certain customers bought ahead, as did we, to curb the immediate tariff effect,” he said. “It may take some time to see an increase of

business for us and the uncertainty these past months as to where the tariffs would settle has also made projecting our growth as a domestic manufacturer challenging.”

The average effective U.S. tariff rate soared to 18.6% by the start of the fall, the highest level in more than 90 years, from 2.5% when President Trump took office in January, according to the Budget Lab at Yale.

The industries most affected are retail, vehicles and parts, consumer, chemicals, metals and mining, apparel and accessories, according to research firm Morningstar.

The auto sector is perhaps feeling tariff pressures more than most.

“Tariffs increase the prices of new cars purchased from the OEM, in our case Mercedes and KIA,” said Nasser Watar, Chief Executive Officer, of family-owned Trophy Automotive Dealer Group in Los Angeles. “Such increases, although paid by the consumer, impacts our business dramatically as customers will not be able to afford the cars they plan to purchase and will move to used cars instead,” Watar said. “This reduces the number of new cars sold by us, and all new cars dealers, and eventually reduces our profits, with that loss of profits it will impact the value of goodwill of the business as the business value is related to net profits.”

The U.S. Chamber of Commerce’s Neil Bradley, Chief Policy Officer and Head of Strategic Advocacy says, “broad-based tariffs raise prices for consumer and business and harm economic growth…(and) they cause uncertainty and disrupt supply chains and are an especially big problem for small businesses that don’t have as many resources to withstand them.”

Bradley says America’s small and family-owned businesses will face an annual $202 billion annual tariff tax if things remain the same.

As a result of navigating tariffs, family business leaders are hesitant to make long-term investments due to the unpredictability of tariff policies and potential shifts in consumer behavior caused by inflation.

Some are not seeing damage.

“We have not seen a significant impact to our business due to the tariffs,” said Arthur Knox, President, of Inolex, based in Philadelphia. Inolex is a designer and manufacturer of ingredients primarily for beauty care, and have been exempted from many of the tariffs, Knox said.

“I’m in support of the tariffs imposed on China since China created barriers to entry for all of our new innovative ingredients,” he said. “We have not been able to export a new ingredient to China for about a decade now. If China invents a new cosmetic ingredient, they can export it to the US immediately, creating a very unfair trading environment.”

Importers of specialty food items, like spices are finding things more difficult. Many Companies, like Harris Spice in Anaheim, Calif., are responsible for sourcing spices from around the world, including Vietnam, India, Brazil, Turkey, Egypt, and China.

Current tariffs will impact its business and the investments made by all spice companies in USA and in origin countries, according to Peter Shah, Chief Executive Officer of Harris Spice, a subsidiary of Harris-Freeman.

“Several sustainable programs have been initiated and funded by US to grow spice in India, Vietnam, Indonesia with Good Agriculture Practices (GAP) and controlled Pesticides meeting US FDA guidelines,” he said. “We propose that Spice & Herbs be exempted from Tariff. Garlic and Onion, which are classified as dehydrated vegetables are gown in USA and imported from China and India, and a tariff on those are okay, since option of US Grown is available and there were higher tariffs on imports from China even in past.”

Advocate for Change

Large corporations have the resources to absorb tariff-related cost increases, diversify their supply chains, or negotiate better deals with suppliers. This puts family-owned businesses, operating on thinner margins and with less purchasing power, at a competitive disadvantage.

Participating in industry associations or advocating for favorable trade policies can help shape the environment for family businesses, too.

By proactively exploring and implementing these multifaceted strategies, family businesses in the pest management industry can better weather the challenges posed by tariffs and protect long-term viability.

By being ahead of the curve in identifying these dynamics allows family businesses to make moves now, while establishing ties in markets with the fastest-growing demand.

Our Capitol Hill insiders tell us: “Don’t wait for others to get in first.”

The uncertainty of it all can be paralyzing, but some outcomes are predictable if you act first. The global trade environment is volatile and politically charged.

By knowing your exposures, scanning for opportunities, reassessing competitive dynamics, leveraging trade agreements, and acting on economic certainties, family businesses can move decisively – even when the world is turbulent.

NPMA has partnered with Family Enterprise USA, and the Policy Taxation Group, non-partisan organizations advocating for family enterprises of all sizes to provide information for family-owned businesses. Both groups are organizers of the Congressional Family Business Caucus and of the Family Enterprise USA Annual Family Business Survey.