The Impact of Tariffs and Trade Policy Uncertainty on SME Supply Chains

The United States economy relies heavily on small and medium-sized enterprises (SMEs). The private sector workforce consists mainly of SME employees. SMEs represent 97% of all importing firms. These firms need global supply chains to support their business models, so they are exposed to the greatest risks from trade policy changes. This research examines the effects of tariffs and trade policy uncertainty (TPU) on SME supply chains. The study draws on theoretical frameworks, including Real Options Theory, Transaction Cost Economics, and Supply Chain Resilience Theory, and uses real-world examples to inform its analysis. The current tariffs impose immediate costs on companies, but trade policy uncertainties prevent SMEs from investing in their supply chains and maintaining agility. The paper evaluates emerging academic findings on SME responses to supply chain disruptions and recommends policies to enhance resilience amid trade policy volatility.