"Air fryers need to be sold at refrigerator prices," when will prices increase, by how much, and tariffs pose a tricky problem for American companies

In the new round of trade policies promoted by the Trump administration, although tariffs on some goods have been reduced, the overall cost pressure on small and medium-sized enterprises (SMEs) in the United States has not eased, and has even worsened due to additional costs such as freight and supply chain fluctuations. For small businesses that rely on imported components and equipment, "survival" has become a more urgent goal than profitability.

Small Business Owners in Distress

Recently, several American business owners spoke out in media interviews and hearings, stating that "there is no profit to speak of, and we can only barely maintain operations."

According to CCTV reports, Bobby Javaheri, who runs a small appliance sales business in California, mentioned that when a batch of Chinese imports arrived at the port recently, he received tariff bills ranging from $9,000 to $21,000, whereas the tariffs for similar goods in the past were only a few hundred dollars. He lamented:

"If you are in a low-margin business, facing such tariffs makes it impossible to continue; I have to sell air fryers at the price of refrigerators."

Javaheri's company mainly sells kitchen appliances made in China, such as air fryers and rice cookers. He pointed out that although some tariffs have recently been reduced, the 30% additional tariff rate is still too high, especially impacting high-priced goods severely. To alleviate pressure, he has been forced to raise prices on all products.

"All products have increased in price, but even so, profits are eaten away by high freight costs."

He noted that since freight costs have tripled, business costs have soared again, and profit margins have been almost completely squeezed. "This year, let alone making a profit, we can only barely keep the company running."

The plight of American business owners was also reflected in a small business hearing held by the U.S. Senate on the 14th of this month. According to CCTV reports, Julie Robbins, CEO of EarthQuaker Devices, a manufacturer of effects pedals, candidly testified that the company is currently facing a liquidity crisis and potential bankruptcy risk.

"Tariffs make it harder for us to recoup our investment costs in existing businesses. If this situation continues, we will face the risk of bankruptcy."

She added that the company's export business accounts for about 30% to 40% of total revenue, with markets including Europe, Australia, Canada, and Japan. Recently, due to "anti-American sentiment" and "global financial market turmoil caused by chaotic tariff policies," export revenues have sharply declined.

During the hearing, Robbins called on the government to quickly eliminate a series of tariff measures to alleviate the operational pressure on small businesses.

Corporate Profits Eaten Away, Price Increases Looming for Consumers

Although there are widespread concerns that increased tariffs will put pressure on American consumers, many people shopping currently do not yet feel significant price changes, or have not paid enough attention to it. However, a series of economic data shows that businesses have been silently bearing this part of the cost The latest report indicates that since the implementation of a new round of tariffs last month, the profit margins of American retailers and wholesalers have experienced the largest decline in nearly a year. Manufacturing companies have also reported that their procurement costs are rising. However, inflation at the consumer level remains mild. For example, the financial report released by retail giant Walmart shows that its sales remain strong. But the company has also issued a warning: as old inventory is consumed, the next round of price increases will inevitably be passed on to consumers.

Meanwhile, the latest consumer confidence index from the University of Michigan reveals a sense of unease. As public concerns about tariffs rise, the confidence index has dropped to its second-lowest level in history, while long-term inflation expectations have reached a new high in decades.

Currently, the U.S. government has suspended additional tariffs on most countries. However, many economists and business executives believe that it is unrealistic for companies to bear the costs on their own for an extended period. It is still difficult to determine which products will increase in price, by how much, and for how long.

David Silverman, a senior director at Fitch Ratings, stated that pricing strategy is a "delicate balancing act," and companies face a tough choice between absorbing costs themselves and passing the pressure onto consumers. He pointed out that Walmart's statement may provide other retailers with "the space to openly discuss price increases."

Wells Fargo economist Sarah House expects that as companies gradually deplete their stockpiles, more businesses will have to pass some costs onto consumers from this summer to autumn. She noted:

"In the early stages of tariffs, companies could barely sustain themselves by compressing profits, but if the policy lasts too long, this approach will be unsustainable."

However, according to data released by the U.S. Bureau of Labor Statistics (BLS) on Friday, the prices of imported goods from China fell by 0.1% last month, marking the fifth consecutive month of decline. Some media outlets have reported that this data suggests that, so far, the main impact of the tariffs has not been borne by U.S. importers. Analysts point out that American consumers may face price increases and longer wait times in the future, as retailers adjust pricing to cope with potential price hikes and shortages of goods.

Walmart Leads the Price Increase

An earlier article from Wall Street Journal stated that under the tariff storm, Walmart has confirmed that it is about to face unprecedented large-scale price increases, which may be followed by the entire U.S. retail industry.

On May 15, global retail giant Walmart sent a clear signal to the market while releasing its better-than-expected quarterly financial report: price increases triggered by tariffs are imminent. Walmart warned that price increases due to tariffs are expected to soon affect the products on shelves, and the company will begin raising prices on some items starting this month.

Walmart's Chief Financial Officer John David Rainey stated in an interview: "If you haven't seen (price increases), it will happen in May, and then it will become more apparent." Rainey bluntly said, "The magnitude and speed of these price increases will be unprecedented." Renny further stated, "If something has a 30% tariff, you are likely to see double-digit (price increases)."

As a retail giant serving 90% of American consumers, Walmart is the largest company to suggest that everyday goods will see price increases due to rising tariffs. Analysts believe that Walmart's move will open the floodgates for widespread price hikes in the retail industry.

According to Axios, Neil Saunders, managing director of GlobalData, believes, "If a low-price-focused player like Walmart is raising prices, it explains why other retailers might follow suit. Walmart is being honest about this, which encourages other retailers to engage in open dialogue as well."

In fact, other companies have already announced price increase plans. Ford Motor Company announced last week that it would raise prices on three of its best-selling models. Luxury brand Hermès also stated that prices in the U.S. market will increase. Next week, Target, Lowe's, and Home Depot will announce their earnings and discuss their financial forecasts, and investors will closely watch whether they will follow the price increase trend.

Walmart CEO Doug McMillon mentioned the "reality of thin margins in retail" during the earnings call, stating, "Given the scale of the tariffs, even at the reduced levels announced this week, we cannot absorb all the pressure." This means that even if the U.S. and China reach a temporary agreement to reduce additional tariffs from 145% to 30%, price increases are still inevitable.

Ram Reddy, chief technology officer of Nagarro Digital Engineering, stated that he expects electronics and toys to be the main categories for Walmart's price increases. Meanwhile, McMillon indicated that Walmart will keep food and consumables prices "as low as possible," but tariffs from countries like Costa Rica, Peru, and Colombia are putting pressure on imported goods such as bananas, avocados, and coffee.

If even Walmart, which promotes the slogan "Save money, live better," struggles to maintain its low-price promise, American consumers and the entire retail industry may face an unprecedented price storm