[CFO Insight Series] AI Debate: Tariffs vs. Free Trade—What Small Business Owners Need to Know

Part of our ongoing Educational Series for Business Owners

In our latest CFO Insights Series installment, we explore a thought-provoking AI debate on tariffs versus free trade. While the discussion delves into broad economic theories, we've distilled key points to highlight how these trade policies can impact small businesses like yours. Understanding these dynamics is crucial for strategic planning in today's global market. We recognize this is tied inextricably into the current political climate. However, our goal is to provide an understanding of the key issues and a way to understand the impact on business in the short-term and long-term. We believe having both a framework to understand and a gameplan to take advantage of these inevitable changes is the right focus for small business owners and CEOs.

Are Tariffs Smart? AI debates 10 Best Theories

1. Tariffs often mean you’ll pay more for materials or products.
   If you buy anything that’s imported — like equipment, parts, or packaging — tariffs can make those items more expensive. That cuts into your profits unless you raise your own prices.

2. Tariffs can protect some industries, but slow down others.
   You might benefit if you're in a U.S.-based industry that’s being "protected" (like steel), but if you're in a business that depends on imports or competes globally, you may be stuck with higher costs and slower growth.

3. Free trade usually means more choice and better prices.
   When goods move freely across borders, you can often find cheaper or better suppliers. Tariffs can limit those options — which can make you less competitive.

4. Trade policies can shift fast — and that can throw off your plans.
   Whether it's a new tax on Chinese imports or a trade deal that changes overnight, these moves can impact your vendors, prices, and timelines. Planning ahead gets harder when the rules keep changing.

5. Uncertainty is the real business killer.
   Even if a tariff doesn’t hit you today, just the risk of new ones can delay hiring, product launches, or inventory decisions. It’s like driving in fog — you go slower because you can’t see what’s ahead.