Small Business Day 2025: Small Business Update

From the ever-changing tariff landscape to the looming “tax cliff” and workforce shortages, small business owners have faced a lot of uncertainty in 2025 so far. During CO—’s 2025 Small Business Day, Editor-in-Chief Jeanette Mulvey sat down with Neil Bradley, Executive Vice President, Chief Policy Officer, and Head of Strategic Advocacy at the U.S. Chamber of Commerce, to discuss these issues.

Bradley offered insights for adapting through policy changes and a hopeful outlook for entrepreneurs navigating the months and years ahead.

How tariffs are impacting small business profit margins in real time

Tariffs — taxes on imported goods — have been on many business owners’ minds since the Trump administration began introducing (and changing) a series of new ones earlier this year. The rates in effect as of May 2025 include:

• 10% on most global imports.
• 25% on steel, aluminum, and auto parts, with more potential product-specific tariffs on the way.
• 145% on goods from China.

Bradley noted that small businesses are disproportionately affected by these tariffs.

“They often don't have the cash balances or reserves to be able to … eat that increased cost of tariff, so they're counting on the ability to pass that cost along to their customers,” he said.

This isn’t always feasible, though: Bradley cited an example of a small wedding dress retailer that now pays more in tariffs than it earns in profit, on goods that have already been sold. This type of situation will likely take a big toll on small businesses as the U.S. negotiates tariffs with other countries.

“Even if it's weeks or months, we are worried about small businesses that might not be able to survive in the meantime,” he added.

[Read more: Small Business Tariff Update: What to Know Now]

The broader impact of tariffs on US businesses

Bradley said one-third of all goods brought into the U.S. are imported by small businesses. That’s about 235,000 companies that rely on imported materials and parts to make goods domestically. The 40,000 small manufacturers among those companies are hit by tariffs on both ends: as importers and as American producers who may be exporting to countries that have imposed retaliatory tariffs.

“If you take that one-third [of imports] and you apply the 10% or the 25% or the 145% to it ... that works out to a tax bill [of] $9,000 a second, every minute of every hour of every day for a full year,” said Bradley.

Aside from cost concerns, the current tariff landscape is creating an environment where U.S. businesses are less globally competitive. Without new trade agreements in place, Bradley warned, American small businesses will face an uneven playing field as other countries form regional trade partnerships and leave the U.S. behind.

For these reasons, the U.S. Chamber is proposing an automatic tariff exclusion for all small businesses, defined as those with fewer than 500 employees, said Bradley. This would eliminate uncertainty and help struggling firms stay afloat.

“You can operate your business knowing that you’re not going to get stuck all of a sudden with this big tax bill,” Bradley added.

[Read more: Tariffs on Imports Rocking Small Businesses as They Scramble to Adapt]

Beyond tariffs: Other key policy concerns for small businesses in 2025

While tariffs dominated the conversation, Bradley also flagged several other policy issues on the horizon for small business owners:

• The “tax cliff.” Unless Congress extends the provisions from the 2017 Tax Cuts and Jobs Act that are set to expire this year, Americans face a potential $4.5 trillion tax increase, most of which would fall on small businesses, said Bradley.
• Beneficial ownership reporting requirements. Companies that were formed domestically no longer need to file beneficial ownership reports.
• Legal immigration to fill workforce gaps. Bradley reaffirmed the Chamber’s backing for expanded legal immigration pathways to help alleviate ongoing labor shortages, which is another top concern for small business owners across the country.

[Read more: Small Business Confidence Declines Amid Rising Concerns About Revenue and Inflation]

According to Bradley, small businesses are well-positioned to meet the challenges ahead because of their agility, creativity, and willingness to take risks, especially when regulatory hurdles are cleared.

“You don't have the bureaucracy that a lot of big businesses have, and so you move faster and you take more advantage of opportunities,” he said to the small business owners in the audience.

Bradley concluded by emphasizing the critical role of entrepreneurs in sustaining the U.S. economy.

“The great dynamism of the American economy is that we have all these people every year who take a chance, who start a small business, who fill a need in society,” he said. “That's what entrepreneurialism is about. It's what we try to champion here at the U.S. Chamber.”

The U.S. Chamber of Commerce is committed to advancing policy solutions that grow the economy and create more opportunities for American workers and businesses. We are collecting stories from businesses large and small in communities across the country to highlight the growth achieved when government gets policy right – and what’s at stake when it doesn’t. Share a story about how trade impacts your business, here.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.