Learn why 74% of SMBs view Chinese tariff risks as severe or moderate and discover strategies to manage supply chain exposure while maintaining profitability in 2025.
Tariffs on Chinese goods have gone from being just another business buzzword to something that keeps many small to medium-sized businesses (SMBs) awake at night. According to Netstock’s Tariff Impact Report, the numbers speak for themselves: 47% of SMBs are seriously concerned about Chinese tariffs, and 74% now see China as a significant supply chain risk.
This isn’t just another economic headline; it’s a wake-up call!
Tariffs are shaking things up and eating away at the tight margins SMBs already operate on. They are causing havoc on inventory planning and pushing business owners to rethink their long-standing ties with suppliers from across the ocean. While our neighbors in Canada and Mexico barely register in terms of tariff-related worry, only 6% to 7%, China stands apart, not only as a key supplier, but as a source of unpredictable costs, shifting lead times, and growing geopolitical tension.
Let’s explore why.
Inside the numbers: Measuring Chinese supply chain exposure
You’ve probably heard the phrase “bring manufacturing back home.” Sounds good, right? But in reality, it’s not that simple. Even with all the talk about reshoring and diversifying, about 65% of the goods SMBs sell, are imported from China. And what’s more interesting, nearly one in five SMBs say over 75% of their inventory is sourced directly from Chinese suppliers. For many, it’s not just a preference; it’s the back-bone to how their businesses operates.
Why are we so dependent on China? Cost plays a huge role. China’s efficiency and scale make it the go-to for low-margin products. Plus, many SMBs have long-standing relationships with their suppliers, which offer reliability, consistent quality, and speed—factors that aren’t easily replicated elsewhere.
Still, this dependence comes with its risks. When tariffs increase or supply lines slow down, these businesses feel the pinch pretty quickly.
Supply chain realities: Why China remains critical
You might be thinking, “Just shift your supply chain somewhere else.” But if you’ve ever tried it, you know it’s much easier said than done.
China’s manufacturing scene is powerful for a reason. It’s got an impressive infrastructure, offering everything from raw materials to finished products, with a level of vertical integration that’s hard to match. Their factories are quick, the logistics are smooth, and suppliers often provide bundled services that streamline production.
Here’s the kicker: even with tariffs reaching 25% or more, manufacturing in China can still be cheaper than alternatives. When you add in factors like tooling costs, vendor quality, order flexibility, and speed to market, many SMBs find that staying put financially makes more sense, even with those pesky tariffs.
The reshoring dilemma
There’s been a big push to reshore manufacturing back to the U.S., politicians and industry groups promoting this as a way to bring jobs home and cut risks. But in reality, executing this plan is a whole different ballgame.
Only around 15% of small businesses feel they can easily reshore. That’s a tiny fraction and shows just how far the gap is between the reshoring theory and what’s possible on the ground. For many SMBs, the U.S. simply lacks the specialized production capabilities they need. Pricing here can be two to three times higher than overseas, and lead times can stretch longer than a rubber band, especially for custom or complex parts.
It’s not that SMBs don’t want to move production closer to home, it’s just that the numbers often don’t add up. And when margins are already razor-thin, taking that leap feels like a gamble most can’t afford.
Strategic approaches for managing Chinese supply chain risk
With tariffs rising and supply chains more fragile than ever, SMBs are finding innovative ways to manage their risks. The smartest ones aren’t panicking, they’re planning.
Using data analytics to quantify China-specific impacts
First up: clarity is crucial. More SMBs are harnessing the power of data to figure out how these tariffs impact them specifically. Instead of making broad assumptions, they’re diving deep into item-level analysis. Which products are taking the hardest hit? Which can absorb the extra costs, and which can’t? This level of detail gives small businesses a solid edge and transforms uncertainty into actionable strategy.
Hybrid sourcing strategies
Instead of completely cutting ties with China, many businesses are exploring hybrid sourcing strategies. This means they keep their Chinese suppliers while adding another source, often from places like Vietnam, India, or Mexico. It’s not always a perfect substitution, but it opens up options. And in today’s volatile environment, having options is invaluable.
While the China factor weighs heavily on SMBs, it’s clear that with the right strategies and insights, they can navigate this challenging landscape. It’s all about striking a balance between maintaining relationships and exploring new avenues for growth. Let’s keep the conversation going about what this means for our communities and how we can all support one another through these turbulent times.
Inventory planning for longer lead times
Even when things run smoothly, importing from China takes time. And when things don’t run smoothly? Delays can drag on for weeks.
That’s why inventory planning is evolving. SMBs are building in buffer stock and adjusting reorder points for variability. They’re using smarter demand forecasts and safety stock calculations to ensure they aren’t caught off guard when shipments stall. It’s about planning not just for the expected, but for the unpredictable.
Strategic cost management
Tariffs eat into your bottom line. The real question is: who pays?
Some SMBs pass the added costs on to customers, especially if they sell premium or niche products. Others absorb them to stay competitive in crowded markets.
Across the board, smart businesses are being strategic about it. They’re modeling different pricing scenarios, testing thresholds, and communicating clearly with suppliers and customers to maintain trust.
There’s no one-size-fits-all answer, but there’s a thoughtful, data-driven way to make the right call for your business.
Technology solutions for supply chain visibility
This is where digital tools step in. Modern supply chain planning platforms give you real-time visibility into tariffs, supplier performance, and global disruptions. They help you spot cost spikes early, pinpoint where delays or imbalances are building, and model “what-if” scenarios, so you can act before a risk turns into a crisis.
For SMBs, this level of visibility was once out of reach. Now, it’s essential. And with so many affordable SaaS options, it’s more accessible than ever.
Staying nimble in an uncertain world
The world is changing fast. Tariffs, politics, pandemics, every year brings a new curveball. But here’s the good news: SMBs are incredibly adaptable. They’re built to move quickly, try new things, and pivot when needed.
The pressure from Chinese tariffs is real, but it’s not the end of the story. With the right mix of data, planning solutions, and strategic partnerships, SMBs can navigate the chaos and find new opportunities.
So, if you’re feeling the weight of these changes, take heart. You’re not alone, and you’re more equipped than you think.
FAQs
How much have Chinese tariffs increased in 2025?
In 2025, Chinese tariffs have significantly increased, affecting many SMBs reliant on imports from China. Tariff rates for various product categories, particularly electronics, machinery, and consumer goods, have reached 25% or more, intensifying the financial strain on these businesses. The increased enforcement of these tariffs also makes compliance more critical for SMBs navigating the Chinese import tariffs.
What industries are most impacted by Chinese tariffs?
Small to medium-sized businesses in industries such as consumer electronics, home goods, apparel, auto parts, tools, and furniture are experiencing the most significant impacts. These sectors heavily rely on Chinese manufacturing for both finished goods and essential components, making them particularly vulnerable to changes in the tariff landscape.
What are the most viable alternatives to Chinese manufacturing?
Businesses are increasingly exploring alternatives like Vietnam, India, and Mexico for their manufacturing needs. These countries provide growing capacity and cost competitiveness. However, when considering reshoring or hybrid sourcing strategies, SMBs should carefully evaluate the quality control, scalability, and logistics infrastructure available in these alternative markets.
How can businesses calculate the true cost impact of Chinese tariffs?
To better understand the impact of Chinese tariffs, SMBs should analyze their costs at the SKU level. This includes assessing raw material costs, shipping, duties, taxes, and the effects of longer lead times. Many businesses now leverage supply chain planning software to analyze these costs effectively, which helps them make informed decisions in response to rising Chinese tariff impacts.
What supply chain technologies help manage Chinese tariff risks?
Netstock is a leading supply and demand planning solution, purpose-built to integrate with your ERP, transforming raw ERP data into actionable supply and demand plans that help protect margins, manage risk, and optimize working capital. Paired with ERP’s like NetSuite, Acumatica or Sage, offer visibility into vendor timelines, tariff data, landed cost analysis, and real-time disruption alerts. These platforms help SMBs make faster, smarter sourcing and pricing decisions.
