US Liberation Day tariffs will shackle Australian SMEs
When US President Donald Trump introduced new tariffs around the world as part of “Liberation Day,” global share markets reacted quickly, with most falling more sharply than they had since the start of the COVID pandemic.
Fast forward to a week later and President Trump’s tiered tariffs for each country based on their trade deficits was put on hold for 90 days. Instead, a 10 per cent tariff will apply to goods shipped in from for each country, with the tariff on goods from China sitting at 145%.
With the change of heart from the US administration, markets rebounded to have one of their best days in 17 years although they’ve since given back nearly a half of those gains.
Further adding to the volatility was the US administration’s decision to now exclude a range of electronic goods from import taxes, including computer hardware and smartphones.
So, what does this all mean for Australia’s small business sector? Put bluntly, it’s not good. Two of the biggest risks to small businesses are tariffs and volatility. The two combined are a crushing blow to the whole sector.
This latest wave of extreme volatility comes at a time when the number of the nation’s SMEs entering insolvency has risen sharply over the past couple of years according to the Reserve Bank.
Considering the current global environment, as the Reserve Bank points out, changes in policy can lead to increased insolvencies as does an extended period of cashflow difficulty.
Unfortunately, the current uncertainty caused by the US administration’s wheeling and dealing on tariffs ticks both these boxes.
This comes at a time when SMEs were already reeling from a Federal Budget which largely overlooked the sector in what the Council of Small Business Organisations Australia (COSBOA) says is “the most challenging environment in living memory”.
Market volatility, new tax and superannuation regulations, and the impact of US tariffs are creating significant challenges for the nation’s SMEs. Maintaining healthy business fundamentals, such as strong cash flow, well-planned budgets, and sustainable payroll structures, are key to navigating uncertain economic conditions.
For businesses facing cash flow challenges, there are sustainable solutions available that help maintain operations without putting personal assets at risk. Tools like invoice finance can unlock funds tied up in unpaid invoices, ensuring businesses can pay staff, suppliers, and continue to grow, even in tough times.
Australia cannot afford to underestimate the fallout from the US-China trade war. China’s weakening appetite for resources, driven by collapsing US demand, is a direct threat to our export markets and will put sharp downward pressure on commodity prices. That spells risk for Australian SMEs across mining, manufacturing, construction, and logistics.
With the RBA already moving towards rate cuts to cushion the blow, businesses will need to think beyond traditional finance to stay afloat. Earlypay’s invoice finance solutions are built for this kind of market, delivering fast and flexible funding to keep cash flows moving when banks and customers cannot.
