One of the results of President Donald Trump's back-and-forth trade war is that some business owners are paying much more than they had anticipated due to the economic phenomenon of tariff stacking, when separate tariffs are compounded. While tariff stacking is mostly being felt by Americans who import Chinese goods, business owners across the U.S. seem to be wary of the continuing trade war, no matter which country is importing goods.
What's 'tariff stacking'? It's an economic scenario that occurs when "multiple tariffs apply to the same imported product under separate trade actions," according to trade policy tracker Global Trade Alert. This can create "cumulative duties that increase the product's final effective rate."
However, not all tariffs stack on top of each other. Some "apply cumulatively, others are mutually exclusive," said Global Trade Alert. Trump's Executive Order 14289 established rules for tariff stacking whereby "certain tariff regimes supersede others and cannot stack."
How's this affecting American businesses? It can cause small business owners to pay more than just the initial cost of the tariffs, say economic experts. Tariff stacking is most often felt by companies that import Chinese goods, because China has been one of the main targets of Trump's tariffs.
Even when Trump paused his steepest tariffs on China in May 2025, not much relief was offered to importers, because stacking multiple import taxes sent the "true cost well above 30%," said CNBC. The "multiple layers of tariffs are a big problem for basic items like kids' backpacks that come largely from China," Dan Anthony, the president of Trade Partnership Worldwide, said to CNBC. "You are talking about rates of over 70%."
Some businesses are reportedly rethinking their models. As a "small business owner handling so much on my own, I can't afford the added stress," Anjali Bhargava, the founder of spice company Anjali's Cup, said to CNBC. Her company will be "discontinuing products as the special vacuum seal tins she uses sell out." |