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Newsweek

Will Small Businesses Like Ours Survive a Trade War?

I'm living the American Dream, while it lasts. Twenty years ago in rural Wisconsin, we started Wonderstate Coffee with a commitment to making great coffee while supporting an environmentally sustainable and socially just network of coffee growers. Thanks to coffee fans in the Midwest and beyond, we have a successful and growing business with 85 employees, three cafe locations, and a local roasting and distribution operation. We were planning to invest in new packaging equipment to keep up with demand, but the recent tariff uncertainty has ground those plans to a halt. In addition to the financing costs, the chaos in the business environment prevents us from feeling confident in such investments. A Wonderstate Coffee worker operating a roaster. A Wonderstate Coffee worker operating a roaster. Photo Courtesy of Wonderstate Coffee The Trump administration's policies are no doubt causing anxiety for small businesses of all stripes, because we exist in a global economy. The business of coffee, which 70 percent of Americans drink every day, is a perfect example. Coffee beans can be grown only in a specific band of the globe and in specific climatic conditions. Beyond a small area in Hawaii and Puerto Rico, none of those places are in the United States. There's no way to bring coffee farming "back" to the U.S.; it was never here to begin with and never could be. A 10 percent tariff on coffee beans—and looming reciprocal tariffs—mean that even before we have to decide whether to pass the cost on to consumers, we need to find the money to bring our coffee into the country. Yes, small businesses are financing the tariffs. The price of coffee beans has already been rising due to crop losses from the extreme weather events of a changing climate, as well as geopolitical uncertainty. These factors put the squeeze on small businesses like mine as we compete with corporate giants. Now we're facing the worst crisis for our company since the height of the COVID-19 pandemic. Back then we did everything we could to keep our doors open to customers. Now we're scrambling to come up with the money to buy our inventory in the first place. Our commitments to paying farmers and our workers more than fairly, and to keeping prices affordable for customers remain as strong as ever; it's our motivation for doing this work. But I honestly don't know how small businesses will get through this if help doesn't come soon. Running a business like ours has never been easy. But in recent years, it's gotten much tougher. Corporate tax breaks have smoothed the path for big companies to continue investing in their growth, leveraging ever greater economies of scale to overwhelm smaller competitors. Meanwhile, health care and benefits costs keep skyrocketing, costs big companies can absorb but which can sink small businesses. At Wonderstate, we provide health coverage for our employees. How many more years of double-digit health care cost increases can we or other small businesses afford? Wonderstate Coffee's 100 percent solar-powered roasting facility in Viroqua, Wis. Wonderstate Coffee's 100 percent solar-powered roasting facility in Viroqua, Wis. Photo Courtesy of Wonderstate Coffee We're also committed to paying our farmers equitably for their work. In 2017, we announced the highest published minimum price guarantee to farmers, more than 80 percent above the Fair Trade conventional minimum price and over 50 percent higher than Fair Trade organic prices. This isn't charity; a healthy coffee economy increases the supply of beans, and ultimately keeps prices manageable for small businesses like ours and for customers who love and rely on their morning cup. This kind of long-term vision is undermined by drastic and unpredictable trade policies. Coffee is a global industry and the futures of farmers, employees, and consumers are extremely interconnected. A climate disaster in Colombia, or a civil crisis in the Democratic Republic of the Congo—both places where we buy beans from—can turn your $2 cup of coffee into a $4 one. The administration's tariffs will push prices even higher. Wonderstate Coffee's Jay Skrede loading green coffee into the roaster. Wonderstate Coffee's Jay Skrede loading green coffee into the roaster. Photo Courtesy of Wonderstate Coffee Small businesses need help now. Ending the tariff threat would be a good start, but the issues we face run deeper. American small businesses were hit hardest by the impacts of the COVID-19 pandemic and now face another crisis. Wonderstate and Main Street USA need an infusion of serious systemic support to keep paying our employees what they need, and offering benefits that keep us all healthy and safe. Targeted tax relief would allow small businesses to reinvest in our companies, allowing us to grow, offer our products to consumers at reasonable prices, and be the engine of a healthier U.S. economy. Making health care more affordable for small businesses, or at least extending the Affordable Care Act's tax credits, would help us continue to offer our employees the benefits they need and which every American deserves. Running Wonderstate has been my lifelong dream come true. I'm proud of what we've built over the last two decades, and grateful to all the people who've supported us along the way. But the headwinds we're now facing threaten all that we've worked for. TJ Semanchin is the owner of Wisconsin-based Wonderstate Coffee and a member of the Main Street Alliance. The views expressed in this article are the writer's own.