With the holiday shopping rush approaching, smaller retailers are facing an unpleasant, tariff-related choice.By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions .Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.They can either pay high levies, or find new suppliers a ...

Core Insights - The holiday season has become chaotic for small retailers like Loftie due to import tariffs on Chinese goods disrupting their supply chains [1][2] - Small businesses are facing significant challenges in managing inventory levels, with many operating at dangerously low stock ahead of peak shopping periods [3][4] Supply Chain Disruptions - Loftie has reduced its inventory to about 10% of what is needed due to tariff uncertainties and supply chain disruptions [2] - The fluctuation in tariffs, including a potential increase to 180%, forced Loftie to consider shifting production to Thailand, but ultimately, the higher costs led them to remain with Chinese manufacturers [3] Impact on Retailers - November and December typically account for one-third of annual profits for U.S. retailers, making inventory management critical during this period [4] - Other small businesses, like Lo & Sons, also faced challenges in balancing inventory and supplier changes, leading to low stock levels [4][5] Financial Strain on Small Retailers - Operating margins for small retailers with total assets under $50 million have dropped to negative 20.7%, with 36% at high risk of bankruptcy compared to 12% of larger retailers [6] - The uncertainty caused by tariffs has prevented small businesses from placing purchase orders, exacerbating their inventory issues [5][6]