Tariffs Are Making Bananas Magically Grow in Michigan

Could Tariffs Kill Small and Medium Businesses?

Even though The Sales Calamity is a blog focused on go-to-market and strategy, we can’t ignore what’s happening. Tariffs are no longer just a policy debate—they’re impacting every one of us: our businesses, our customers, and the entire economy.

There’s been no shortage of coverage around the new tariffs—but two critical points are being overlooked. First, the myth of their strategic value. Second, the devastating short- and long-term impact on SMBs—the backbone of the U.S. economy.

The Myth of Strategic Value

Tariffs can be a powerful tool when applied with purpose. For example, the U.S. imports the majority of its pharmaceuticals. If the global supply chain were disrupted—as it was during COVID—we’d face serious risks to public health. In cases like this, tariffs can be used to reduce dependency by making imports more expensive and encouraging local manufacturing.

But that only works when combined with investment. Take semiconductors: The Biden administration imposed tariffs on Chinese semiconductors, but also passed the CHIPS Act in 2022, allocating $280 billion to rebuild domestic semiconductor production. Even with that funding, progress is slow. In three years, only $33 billion has been awarded. Why? Because you can’t fast-track decades of lost expertise, supply chains, and infrastructure. Even with a flood of public money, it takes time. Still, that investment has catalyzed over $400 billion in private capital. South Korea’s Hyundai has invested $12.6bn to build an electric vehicle and battery cell plant, which took about two and a half years from deal signing to production.

Now Let’s Talk Bananas

The new round of tariffs? Not strategic. They’ve been applied broadly—across all imports—with no plan to build local capacity. So now, we’re in a situation where even basic commodities are being impacted.

Take bananas. Only a few U.S. states—California, Florida, Hawaii—have the climate to grow them. In 2022, bananas from Hawaii cost $1.14 per pound. From Guatemala? $0.34. That’s an $0.80 loss in value per pound if we try to grow them here instead of importing. Multiply that kind of inefficiency across the entire economy, and we’re talking trillions of dollars in destroyed value.

It’s like shopping at two grocery stores side-by-side, one cheaper, one more expensive—but being forced to buy from the more expensive one. That extra dollar you spend isn’t just gone—it’s a dollar you can’t put toward your mortgage, your retirement, or your kid’s education. That’s why as investors are figuratively forced to buy the expensive bananas, the pending tariffs have destroyed more than $6 trillion in economic value in just one week.

Tariffs and the SMB Death Spiral

Now let’s talk about who’s really going to pay the price: small and medium-sized businesses.

“Made in America” is one of the most misunderstood labels in the country. According to the FTC, a product must be “all or virtually all” made in the U.S.—but in practice, that means about 60% of components and final assembly are domestic. The rest? Imported.

In industries like automotive or industrial machinery, components can cross the border seven times before a final product is ready. Tariffs disrupt every one of those crossings.

Large companies will survive. They have procurement departments, supply chain redundancy, and negotiation leverage. Sure, they’ll take a hit in revenue, but they’ll restructure (hello lay-offs), cut costs, and ride it out.

Medium businesses? They don’t have that luxury. No leverage. No supply chain depth. No room for error. They’ll be forced to raise prices to offset costs—and lose customers as a result. Many won’t make it. And here’s the real kicker: SMBs account for 45% of U.S. payroll. When they slow down, unemployment follows. And with it, a recession.

The Bigger Picture

The best-case scenario? These tariffs are a negotiation tactic, and the administration will walk them back soon. Many CEOs are holding onto that hope.

But damage has already been done. Global trust in the U.S. as a stable, fair player is eroding—and trust is the fuel of investment.

We are in for a tough ride. And worse, it’s hard to see what lies on the other side. The free-trade world we’ve known—driven by western coalitions—is over. Something new is coming. We just don’t know what it is yet. But it doesn’t look promising.