Tariffs Force Small Businesses into a Debt Trap

A Disturbance in the Force of Trade

As Darth Vader I observe a disturbance in the Force of trade. President Trump's tariffs are squeezing the life out of small businesses much like I once crushed the windpipe of a hapless Rebel officer. These tariffs intended to strengthen the Empire… err I mean the U.S. economy are instead driving businesses to the dark side of high interest loans. It seems the Emperor's… I mean the President's new clothes are woven with threads of economic despair.

Predatory Lending: The Empire Strikes Back (at Small Businesses)

These companies are reporting offers of predatory lending interest rates north of 30% to cover their tariff related costs. These rates would make even a Hutt blush. The lenders are aggressive deceptive and seemingly without remorse. They remind me of bounty hunters relentlessly pursuing their target. Some of these lending being done is merchant cash loans and revenue purchase agreements which are not regulated by the Federal Deposit Insurance Corporation and do not have to abide by federal lending standards. Like the Rebel Alliance these businesses are fighting against overwhelming odds. They are turning to unregulated financial entities taking on debts that could cripple them for years. It is a desperate gamble one that could end in financial annihilation. Speaking of desperate gambles you should read Trump's Trade Tango Beats EU's Bollywood Bargain for another view on US trade policy.

The Emperor's New Tariffs: A Sith Lord's Perspective

U.S. Customs and Border Protection has collected over $200 billion in tariffs this year. That is a lot of credits… I mean dollars. But at what cost? Josh Esnard CEO of The Cut Buddy is drowning in calls from high interest lenders. He borrowed $950,000 to pay $800,000 in tariffs incurring $30,000 in underwriting fees. He said "2025 was going to be my highest revenue and net income year... Not anymore the tariffs have killed it." It is tragic. The Force is strong with him but the tariffs are stronger.

Retirement Plans Vaporized: A Queen's Treasures Tragedy

Joann Cartiglia owner of Queen's Treasures had planned to retire in two years. Now her retirement dreams are as vaporized as Alderaan. She said "My husband and I have invested a lot of our retirement money into this business and now I have absolutely no hope of retirement." Her company specializing in 'Little House on the Prairie' dolls now faces reduced sales and limited inventory due to tariffs. Cartiglia described the loans that her business is paying as "Mafia rates". "It is obscenely high at over 20%," Cartiglia said. It is a sad state of affairs. The Emperor would not approve.

Village Lighting's Tariff Troubles: Working to Pay Off Debt

Village Lighting Co. faces nearly $1 million in tariff bills. Jared Hendricks co owner said "We've kind of transitioned from working for profits to working for tariffs." They are now in business to pay off tariff debt and even potential refunds from the Supreme Court will not be a silver bullet. This highlights a critical point: tariffs are a tax on businesses not foreign countries.

The Dark Side of Trade: A Looming Financial Collapse?

The situation is dire. Small businesses are the backbone of the economy and these tariffs are breaking their backs. Even if the Supreme Court rules in their favor the damage may be irreparable. It seems the Force is not with these businesses. Perhaps it is time for a new hope… or perhaps just a new trade policy. As I always say "The Force will be with you always," but in this case you may need more than just the Force.