Small US Retailers Brace for Holiday Shortfalls as Tariffs Disrupt Supply Chains

WASHINGTON, D.C., Nov. 26, 2025 — Small US retailers usually depend on November and December to push their yearly numbers into healthier territory. This year feels different. The holiday scramble has become unpredictable as tariff shifts on Chinese imports push supply chains into unfamiliar territory. Companies that normally place routine orders for the season are now caught between higher costs, slower shipments, and uncertain demand.

Loftie, a wellness and consumer tech brand based in New York, offers a clear example. The company sells sunrise lamps and phone-free alarm clocks that are made in China. Leaders at Loftie described a situation in which sudden tariff changes forced them to rethink everything from pricing to production. Their inventory levels fell sharply, leaving them with only a fraction of what they planned to sell during the holidays. The team tried to adjust but the timeline for switching factories or rerouting production proved more complicated than anticipated.

For many businesses, the issue is not just higher duties. The challenge arises from the inconsistent flow of goods and the long lead times that follow. Retailers have become accustomed to the speed and dependability of established Chinese manufacturers. Any disruption to this rhythm creates immediate stress during the busiest shopping period of the year.

Delays and Tough Choices

Earlier in the year, tariff hikes reached the point where duties on certain goods threatened to climb as high as 180 percent. This led several businesses to explore production in places such as Thailand. The hope was that a shift would keep costs under control while preserving product quality. What they found instead was a new set of complications. Some factories charged far more than expected, and the move brought new delays rather than relief.

Loftie decided that the cost and time needed to move production fully were too heavy to carry. They returned to China despite the added expense. This decision came with trade-offs because shipments kept falling behind schedule. Other small retailers faced a similar puzzle. They needed inventory but had limited leverage to speed up manufacturing cycles. Freight availability added another layer of pressure. The result was a season marked by thinner shelves and a scramble to keep even core products in stock.

Big Retailers Versus Small Businesses

Large chains hold significant advantages during tariff-driven disruptions. Companies such as Walmart and Costco have broader supplier networks, larger financial cushions, and greater negotiating power. They can withstand delays without sinking into operational trouble.

Small firms operate with narrow budgets and limited room to absorb sudden spikes in cost. Data cited in the Reuters report showed that businesses with assets under fifty million dollars experienced steep declines in their financial indicators. Profit margins dropped into negative territory for many, and more than a third entered a high-risk zone that signalled potential instability.

Lo and Sons, another small retailer mentioned in the report, described a season shaped by uncertainty. The company struggled to place orders early enough while trying to keep a close watch on rising expenses. They faced a painful balance between stocking enough to satisfy demand and avoiding unsellable inventory if tariffs shifted again. With higher prices on everything from materials to logistics, these choices became increasingly difficult.

Can Small Retailers Survive the Holidays?

Strategies Being Tried: Many retailers began experimenting with ways to cushion the blow. Some placed orders months earlier than usual, hoping that a broader buffer would counter delayed shipments. Others trimmed their product lines, deciding to focus only on items that reliably perform during the holidays. There were companies that cut jobs to conserve cash. A few doubled down on limited production shifts within the United States despite higher operating costs. Each approach carried benefits and risks.

What the Future May Hold: A clear path forward remains uncertain. Even if tariffs remain stable for the coming months, the ripple effects from earlier disruptions will continue into next year. Retailers fear that weak inventory levels will hurt holiday revenue at a time when consumer spending already faces pressure from broader economic concerns. Many small businesses hope that final shipments will arrive before Black Friday or the final sales push in December. Yet the mood within the sector remains cautious.

The Reuters reporting shows a segment of the retail world trying to outlast a period defined by unpredictability. Some businesses may find short-term fixes, while others could be pushed into difficult financial positions. The holiday season continues to hold promise, but the cushion is thin and the margin for error is small. Many small retailers are heading into the busiest shopping days with mixed expectations and a tight grip on available inventory.

Retailers have become accustomed to the speed and dependability of established Chinese manufacturers. Any disruption to this rhythm creates immediate stress during the busiest shopping period of the year.

Inputs from Diana Chou

Editing by David Ryder