In Minneapolis, Jeff Anderson’s wholesale trade company is bracing for another wave of price increases after tariffs rippled through his supply chain. In Atlanta, Valerie Rachel is gaming out how much gas her home health agency needs each day. In Chicago, Diana Zarkha is wondering whether some of her logistics company clients will have any margins left.
While it’s too soon to tell how spiking oil and gas prices will shape the entire economy, for many small businesses, the hits just keep coming.
“With all of the tariffs and the import taxes and exports taxes, I want to believe, at the end of the day, that it is going to work itself out,” said Christy McInnis, president of Construction Sales and Service. “But the hit that we’re taking, as an agriculture equipment dealer and outdoor power equipment dealer, is heavy right now.”
That kind of anxiety has pulsed through the economy for months. Consumer sentiment, as measured by the University of Michigan, ticked lower in March, gas prices and the war in Iran. The report noted that a “broad swath of consumers across incomes, ages and political affiliation” also downgraded their expectations for personal finances.
Meanwhile, oil prices are continuing to soar. On Thursday, the global benchmark Brent crude oil briefly climbed past $117 per barrel as Gulf states incurred more attacks on their infrastructure. Diesel averaged $5 per gallon, compared with $3.60 one year ago, according to AAA.
But while large swaths around the globe are feeling the sting from energy shocks and falling currencies, major pillars of the U.S. economy are holding firm. Executives from American Airlines, Delta Air Lines and United Airlines said they were facing a $400 million increase in fuel expenses in the first quarter. But travelers are still eager to fly, helping offset rising costs and disruptions from winter storms.
Higher prices for airfare and gas could thwart the President Donald Trump’s pledges to make life more affordable. The administration said Thursday that it planned to remove sanctions on Iranian oil, an unorthodox move meant to cool crude prices. Earlier in the week, Trump also moved to combat rising oil prices with a 60-day suspension of the Jones Act, which prohibits foreign vessels from shipping oil and gas between U.S. ports. The administration also issued a waiver that authorizes U.S. firms to do business with Venezuela’s state oil company, lifting sanctions that made it difficult for the country to export its crude.
White House officials are projecting confidence. Appearing Tuesday on CNBC, Kevin Hassett, one of Trump’s top economic advisers, said the economy was seeing productivity growth and overall strength. If the war were to be extended, Hassett said, “it wouldn’t really disrupt the U.S. economy very much at all.”
“It would hurt consumers, and we’d have to think about, if that continued, what we would have to do that about that,” Hassett said. “But that’s really the last of our concerns right now, because we’re very confident that this thing is going ahead of schedule.”
In a statement, White House spokesman Kush Desai said it was a priority for the administration to safeguard the United States’ national security, along with “restoring economic dynamism and growth for small businesses.” Desai said the administration has moved to pare back regulations and ensure permanent tax deductions for small businesses, among other measures.
The Federal Reserve struck a more cautious tone this week when officials left interest rates unchanged, weighing inflation risks alongside a stalling job market. At a news conference, Federal Reserve Board Chair Jerome H. Powell said the underlying economy is strong, but no one knows whether or how much the war could change that.
“If we have a long period of much higher gas prices, that’s going to weigh on consumption, that will weigh on disposable personal income,” Powell said. “But we don’t know if that’s going to happen. It could be something quite different than that.”
In the meantime, small businesses across the country say they are facing yet another wave of uncertainty — after the pandemic, high inflation, rising interest rates, fears of a recession, the aftershocks of Russia’s invasion of Ukraine, Trump’s tariff regime and more. A new economic snapshot released Friday by the National Small Business Association showed more than half of small-business owners say they believe that the economy is worse today than it was a year ago. The number of small businesses that reported an increase in revenue over the past year was at its lowest point in more than a decade.
Zarkha, managing director and owner of Commercial Capital Consulting Group, works with small businesses on their bookkeeping needs and helps connect them to commercial financing. Many of her customers are immigrant-owned trucking and logistics companies that run on thin margins even in healthy times. Fuel costs can account for 25 to 40 percent of expenses, and a sharp rise diminishes margins.
Many of Zarkha’s clients have already navigated hard times; some have gone out of business over the past few years or decided they couldn’t pay for her services. Then there are ongoing staff shortages and a new Trump rule that means some 200,000 immigrant truck drivers are beginning to lose their commercial driver’s licenses.
“They can’t afford to buy another truck, because they don’t know if they’re going to be able to run and operate it,” Zarkha said. “They’re holding off on expansion. They’re holding off on providing benefits to drivers.”
For McInnis, of Construction Sales and Service, who sells agricultural equipment in the Florida Panhandle, spiking fuel costs arrived before her last hurdles were fully resolved. In the past few months, she’s tried to sort out if she qualifies for any sort of tariff refund for the tractors she buys and sells. Now she’s wondering whether global shipping delays will stall her ability to make sure her customers can get parts for all kinds of equipment. Her entire business runs on fuel.
“Everything is that trickle effect and that impacts the bottom line,” she said.
In the Atlanta area, Rachel is the founder of Simplicity Healthcare Management, a private home health agency. Her staff of 14 visits seniors’ homes to help bathe, dress and remind about medications. Over the past few weeks, Rachel has watched gas prices in her area climb 20, 40 then 50 cents on the gallon — making a speedy dent in the gas cards she hands out to employees who can clock almost 30 miles per day. It’s not an option to take fewer trips, because that means lowering her standard of care.
Rachel wants to expand her business into diagnostics and labs, and it’s coming up on the time for her to grant yearly raises. She doesn’t want higher gas costs to undercut those opportunities, saying: “We cannot get lost. We have to keep moving forward.”
Anderson’s wholesale company, ATEK Distribution, has had to pivot before. Anderson started the business, which specializes in electrical equipment, in 2018 — then quickly shifted to selling personal protective equipment during the pandemic. Since then, he’s weathered tariffs and is now expecting another wave of price increases because oil runs through his entire supply chain. His company sells the jacket that goes over various cables, and that jacket is made from petroleum products.
Anderson said he got a new price sheet from one of the companies he buys from earlier this week. He had yet to open it, he said, but was sure the costs had gone up.
Evan Halper and Rachel Lerman contributed to this report.
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