March 3rd 2025.
My name is Quinting Lacewell and I have spent many years working at the crossroads of government and business. My main focus has been helping cities and companies navigate economic policies that have a direct impact on our communities. Throughout my career, I have witnessed how trade policies, especially tariffs, can have a ripple effect on various industries, ultimately affecting everything from supply chains to hiring decisions.
The effects of these policies are even more pronounced for Black-owned businesses. These businesses already face systematic barriers when it comes to accessing capital, securing government contracts, and building relationships with suppliers that are essential for growth. When tariffs disrupt the market, it creates an even more difficult playing field for these businesses.
One of the biggest challenges is the increase in costs and the tough decisions that businesses have to make as a result. Tariffs drive up the cost of imported goods, and these increases are not absorbed by the companies who import them, but rather passed down to the consumer. For Black-owned businesses that rely on imported materials, this means higher prices, smaller profit margins, and the tough decision of whether to absorb the costs or pass them on to their customers.
Let's take the example of a Black-owned construction company bidding on a local development project. If tariffs increase the price of imported steel and lumber, their costs go up, while larger competitors with more resources can buy in bulk or find alternative suppliers. This puts them at a disadvantage in a market where profit margins are already slim, making it harder to compete, win contracts, and grow their business.
To address these challenges, it is crucial for cities to adopt best practices that have proven to be effective in other areas. This includes workforce development initiatives, such as supplier diversity programs, which can help small businesses access more competitive pricing by connecting them with local manufacturers and alternative suppliers.
Another issue that affects small businesses, especially those owned by Black entrepreneurs, is the disruption of supply chains. These supply chains are built on consistency and predictability, so when tariffs suddenly increase the cost of raw materials or cause delays in shipments, it can have a devastating impact on small businesses.
For instance, imagine a Black-owned apparel brand that sources fabrics from abroad. A sudden tariff hike means higher prices, delays at ports, and the possibility of losing seasonal inventory before it even arrives. Large retailers can adjust by negotiating supplier discounts or shifting production, but smaller businesses often don't have that flexibility. This is where municipal small business advisory councils can play a crucial role. These councils, like the ones in Birmingham and Kansas City, create a direct line of communication between policymakers and small business owners, helping cities design trade-related policies that mitigate supply chain disruptions for small businesses.
Another area where Black-owned businesses face challenges is in expanding beyond U.S. borders. Many of these businesses are looking to tap into international markets to scale up, but when tariffs trigger retaliatory measures from other countries, these opportunities diminish.
For example, consider a Black-owned food and beverage company trying to break into European markets. If European countries impose tariffs in response to U.S. policies, American products become more expensive overseas. A multinational corporation may be able to weather this storm by diversifying their sales, but for a small business relying on international growth, the impact can be crippling. To address this, cities should prioritize export assistance programs that help small businesses navigate international trade barriers. For instance, the City of Phoenix's PHXbizConnect platform provides on-demand business resources, expert insights, and networking opportunities that can be adapted to help Black-owned businesses access global markets.
Another consequence of tariffs is the tightening of capital access. When there is economic uncertainty caused by tariffs, banks and investors become more risk-averse, making it harder for entrepreneurs to secure funding. This is even more challenging for Black entrepreneurs who already face higher rejection rates for business loans.
For instance, imagine a Black-owned tech startup seeking investment to scale production. If tariffs cause fluctuations in component prices, investors may see the business as a riskier bet, delaying funding or offering unfavorable terms. Without access to capital, these companies struggle to expand, innovate, or hire. To combat this, small business connector programs, like the ones in North Las Vegas and Fort Worth, provide direct access to capital, business counseling, and workforce development support. Expanding these programs would help Black-owned businesses secure funding despite economic uncertainty.
To address the issues caused by tariffs, policymakers must take a smarter approach to trade policies. Tariffs themselves are not inherently bad, but their unintended consequences can be devastating for small and Black-owned businesses. To build a more inclusive economy, it is essential for policymakers to focus on strengthening local business ecosystems by investing in capital access, supply chain resilience, and workforce development.
To achieve this, here are a few things that policymakers should do:
1. Expand access to capital - It is crucial to strengthen loan programs, grants, and public-private partnerships to ensure that Black entrepreneurs can weather economic fluctuations. Cities like Fort Worth have created one-stop business hubs to help connect entrepreneurs with funding and resources.
2. Support supply chain resilience - Investing in local manufacturing and supplier diversity initiatives can reduce reliance on unstable international markets. Economic Pulse Surveys, like the ones in El Paso, provide real-time data on workforce trends, helping cities tailor business support programs.
3. Provide targeted relief - Policymakers should explore options such as tax incentives or tariff exemptions for small businesses that are hit the hardest by supply chain disruptions. Strategic small business task forces, like the ones in Kansas City, can advocate for these policies and help implement relief measures.
4. Improve workforce development - Investing in upskilling programs, such as Albuquerque's Job Training Initiative, can help small businesses hire and retain workers despite economic downturns. Similar programs can be implemented to strengthen Black-owned businesses facing rising costs.
5. Enhance business navigation support - Programs like Tampa's Small Business Navigator ensure that entrepreneurs have the tools and guidance they need to adapt to shifting economic conditions, including tariff-related disruptions.
In conclusion, tariffs alone will not make or break the economy, but when their impact disproportionately harms small and Black-owned businesses, it becomes a problem that requires solutions. As the co-chair of the Business Council for the U.S. Mayor Conference, I am passionate about expanding opportunities for Black entrepreneurs. By implementing these policy solutions, we can ensure that these businesses not only survive but thrive.
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