The High Cost of Tariffs: What’s at Stake for Black-Owned Businesses

The High Cost of Tariffs: What’s at Stake for Black-Owned Businesses By Ja’Lia Taylor, Ph.D., NCNW director of policy, telecommunications and technology
August is recognized nationally as Black Business Month, a time dedicated to celebrating the achievements of Black entrepreneurs and promoting support for Black-owned enterprises. Traditionally, the month serves as an opportunity to highlight the resilience, innovation, and cultural contributions of these businesses. Yet in 2025, the observance arrives under difficult circumstances. Sweeping tariffs on imported goods, recently enacted by the Trump administration, are raising costs across the economy, from food and clothing to electronics and auto parts.

For Black-owned businesses, the consequences may be particularly severe. Already operating with less access to capital and thinner profit margins than their white counterparts, many Black entrepreneurs face unique vulnerabilities when supply costs rise. Tariffs, while designed to protect certain domestic industries, often have the unintended effect of increasing consumer prices and limiting purchasing power. For businesses concentrated in sectors such as beauty, food service, retail, and transportation, all of which rely heavily on imports, these added costs create a direct threat to long-term stability.

Historical Patterns of Disadvantage
The vulnerability of Black-owned businesses under current trade policies reflects long-standing systemic disparities. Data from the U.S. Census Bureau show that Black-owned firms account for nearly 10 percent of all businesses nationwide, yet they generate significantly less revenue on average compared to white-owned firms (U.S. Census Bureau, 2023). Many are smaller in scale, operate with limited staff, and report challenges in securing credit or investment.

  During past economic crises, these disadvantages have translated into disproportionate closures. Following the Great Recession, Black-owned businesses closed at the highest rate of any demographic group. More recently, during the COVID-19 pandemic, they were nearly twice as likely to shut down in the early months compared with white-owned businesses, according to the Federal Reserve (Fairlie, 2020). The reintroduction of major tariffs threatens to trigger similar outcomes and deepen historic inequities.

  These disparities are not new. From Reconstruction to the Jim Crow era, Black entrepreneurs faced structural barriers such as exclusion from mainstream banking, denial of business loans, and discriminatory zoning laws. Redlining in the mid-twentieth century prevented many Black families from building wealth that could later be reinvested in businesses. Even as civil rights legislation expanded access, systemic discrimination persisted in lending practices. A 2019 report from the Federal Reserve found that Black entrepreneurs were twice as likely to be denied small business loans as white applicants, even when credit scores were similar (Federal Reserve, 2019). This pattern of unequal access to financial resources continues to shape the current business landscape.

  Industries Feeling the Strain
Several industries where Black entrepreneurs are especially active are already feeling the effects. In the beauty sector, for example, supply chains are heavily dependent on imported goods, from hair extensions to specialty products manufactured overseas. Tariff-related price increases can force salons and retailers to raise prices, often in markets where customers are highly price sensitive.

  The restaurant and food service industry faces similar challenges. Rising costs of imported ingredients and equipment, combined with already narrow margins, can push small establishments into financial distress. Retail businesses, many of which rely on imported apparel, electronics, or household goods, are caught between higher supplier costs and customers unwilling or unable to absorb price increases.

  Transportation firms, particularly small trucking and logistics operations, also report higher expenses for parts and equipment sourced globally. As these costs mount, Black-owned businesses across sectors may confront difficult choices: reduce staff, scale back operations, or close altogether.

  Geographically, these industries are often concentrated in urban centers where Black businesses form a critical part of local economies. Cities such as Atlanta, Washington, D.C., Detroit, and Houston have thriving ecosystems of Black-owned enterprises. However, their dependence on industries linked to global trade means they are disproportionately affected by tariff-driven price increases.

  Community and Cultural Impact
The loss of Black-owned businesses has implications far beyond economics. These enterprises often function as cultural institutions, community anchors, and safe spaces. They employ local residents, reinvest dollars within neighborhoods, and contribute to pathways of generational wealth. Their decline would represent both a financial setback and a social one.

  Research underscores the ripple effect of these closures. A 2023 Brookings Institution study found that communities with higher concentrations of Black-owned businesses experienced stronger local economic growth and more stable employment patterns (Dixon et al., 2023). When these businesses are destabilized, entire neighborhoods feel the consequences.

  History provides sobering examples. The destruction of thriving Black business districts such as Greenwood in Tulsa, Oklahoma, during the early twentieth century left lasting scars on generational wealth. More recently, the pandemic exposed the fragility of Black business ecosystems, as thousands of firms closed permanently. These losses extend beyond balance sheets; they erode cultural heritage, community pride, and opportunities for intergenerational progress.

  Technology as a Benefit
While policy decisions created the current tariff environment, technology offers potential tools for businesses seeking to adapt. Artificial intelligence (AI) is increasingly being explored as a way to manage costs, improve efficiency, and maintain competitiveness. AI applications for small businesses include forecasting cash flow, identifying alternative suppliers, optimizing supply chains, and automating tasks such as bookkeeping, scheduling, and customer outreach.

  Black entrepreneurs have been among the fastest adopters of digital tools. Many were early adopters of social media marketing, mobile point-of-sale systems, and e-commerce platforms. Surveys from the National Black Chamber of Commerce suggest that a growing number are now experimenting with AI-driven tools to reduce overhead and reach new customers (National Black Chamber of Commerce, 2024).

  However, experts caution that adoption alone is not sufficient. Without access to training, capital investment, and reliable digital infrastructure, Black-owned businesses risk being left behind in the next wave of technological change. As noted in a McKinsey report, digital divides could widen existing disparities if proactive measures are not taken to ensure equitable access (McKinsey & Company, 2024).

  Beyond AI, broader technological equity issues remain pressing. Broadband access continues to be uneven across communities, particularly in rural and low-income urban neighborhoods where many Black businesses operate. The Federal Communications Commission estimates that more than 14 million Americans still lack access to high-speed internet (FCC, 2024). Without affordable broadband, small businesses cannot fully participate in digital markets or benefit from emerging technologies.

  Policy and Private-Sector Responses
The current moment underscores the importance of policy and institutional support. Trade decisions such as tariffs have broad effects, but targeted assistance can mitigate harm to vulnerable businesses. Advocates argue that policymakers should design trade and small business policies that account for disparate impacts, ensuring that Black-owned firms are not disproportionately harmed.

  Private companies and philanthropic organizations are expanding efforts to bridge the technology gap. Several major corporations have launched AI training and financing initiatives specifically aimed at underrepresented entrepreneurs for example Amazon and Microsoft. Nonprofits and chambers of commerce are also beginning to offer workshops and mentorship programs focused on digital transformation.

  State and local governments are experimenting with innovative approaches as well. Some cities have created emergency relief funds for minority-owned businesses facing sudden cost increases. Others have introduced public-private partnerships to expand broadband infrastructure and digital literacy training. These localized initiatives demonstrate how targeted interventions can cushion external shocks while building long-term resilience.

  Looking Ahead
As Black Business Month continues, the dual realities of celebration and challenge coexist. On one hand, there is much to honor in the resilience and innovation of Black entrepreneurs. On the other, new economic pressures remind us of the fragility of progress without sustained support.

  The tariff-driven cost increases of 2025 represent another uphill battle. Yet history shows that Black businesses, despite systemic barriers, remain remarkably resilient. The critical question is whether communities, policymakers, and institutions will provide the resources and support needed to ensure their survival and growth.

  Artificial intelligence will not resolve all challenges, but it may become an important part of the solution if deployed equitably. Combined with fair trade practices, targeted investment, and intentional community support, technology could help Black-owned businesses weather current pressures and position themselves for long-term success.

  Black Business Month offers not only a moment of recognition but also an opportunity to reimagine economic justice. Ensuring the health of Black-owned enterprises is essential for their owners and employees and for the vitality of communities nationwide. Their survival and growth are not merely economic imperatives. They are cultural, social, and moral imperatives as well.

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