Tariff uncertainty could curb investment in small businesses, UN trade agency says
The World Trade Organization (TO) warned that unpredictable tariff patterns are discouraging small‑business owners from investing in new projects or expanding their shops.
A new study released Thursday examined how sudden changes in import duties affect small‑cap companies in both developed and developing economies. The research found that when governments tweak tariffs without clear guidance, entrepreneurs hesitate to allocate capital, fearing that their increased costs could erode profits.
“The data show a clear link between tariff volatility and reduced investment from small firms,” said Dr. Aisha Khatri, lead analyst at WTO. “When businesses can’t plan for stable costs, they cut back on hiring, inventory, and even on opening new locations.”
The study covered 25 countries, including the United States, Brazil, China and several Southeast Asian nations. In each region, small‑business owners cited tariff uncertainty as a top barrier—rising from concerns about compliance costs to fears that unexpected duty hikes could wipe out thin profit margins.
Policy makers across the globe face a dilemma. “Tariffs are a tool to protect local manufacturing,” said Steve Martinez, director of trade policy at the Small Business Administration. “But too much unpredictability can undermine the very growth you’re trying to protect.”
Experts recommend that governments adopt transparent, long‑term tariff schedules and communicate possible changes well in advance. “Clarity will give small operators the confidence they need to invest,” Khatri added.
In the meantime, the UN trade agency urges businesses to diversify their supply chains and look for alternative markets to cushion against tariff swings. The report also highlights the importance of digital trade tools that allow real‑time updates on duty rates, helping firms adjust quickly.
Small firms that remain wary of tariff changes are already slowing expansion. The WTO’s findings underline the need for predictable trade policies, which could unlock billions of dollars in new investment and support jobs worldwide.
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