U.S. small businesses 'at risk of bankruptcy' due to tariff policy

Small business owners in the United States have warned that they are at risk of bankruptcy while voicing their concerns about the current tariff policy under the administration of U.S. President Donald Trump.

At a U.S. Senate Small Business & Entrepreneurship Committee hearing on Wednesday, Julie Robbins, CEO of audio effects gear maker EarthQuaker Devices, said the tariffs have made it increasingly difficult to recover business investments.

If the situation persists, they will face the very real risk of bankruptcy, said Robbins, adding that they are already caught in a liquidity crisis.

She said export sales account for 30 percent to 40 percent of their total revenue, with key markets including Europe, Australia, Canada and Japan, and their export business has been severely impacted by tariffs.

In recent months, export revenue has plummeted due to both anti-American sentiment and the global financial market volatility triggered by inconsistent U.S. tariff policies, said Robbins.

She expressed hope that the U.S. government would repeal these tariff measures to alleviate the operational pressures on small businesses.

Warns of price increases

Walmart on Thursday reported mixed results for its fiscal first quarter ending April 30, narrowly missing revenue expectations as the retailer signaled that rising tariffs are likely to lead to higher prices for consumers.

While the company beat earnings estimates, Walmart CEO Doug McMillon warned that current tariff levels – despite a temporary reduction on Chinese imports – are "still too high" for Walmart or its suppliers to fully absorb.

"We will do our best to keep our prices as low as possible. But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren't able to absorb all the pressure given the reality of narrow retail margins," McMillon said Thursday on an earnings call. "The higher tariffs will result in higher prices," he said.

Walmart's revenue for the quarter totaled $165.61 billion, up 2.5 percent from a year ago but slightly below analysts' expectations of $165.84 billion. Adjusted earnings per share came in at 61 cents, beating the forecast of 58 cents. Net income declined to 4.49 billion from 5.10 billion dollars a year earlier.

While Walmart achieved its first profitable quarter for its e-commerce operations both in the United States and globally, concerns about future pricing overshadowed the milestone. Tariffs on Chinese imports, particularly in categories like toys and electronics, continue to exert pressure, as do duties on products from countries like Costa Rica, Peru and Colombia, which have affected prices for items such as coffee, bananas, avocados and roses.

"We're wired for everyday low prices, but the magnitude of these increases is more than any retailer can absorb," Walmart Chief Financial Officer John David Rainey told CNBC. "It's more than any supplier can absorb. And so I'm concerned that consumers are going to start seeing higher prices."

Rainey said the impact would likely start to show toward the end of May and become more noticeable in June. Walmart is working closely with suppliers to maintain value but admitted the speed and scale of cost increases are "a little bit unprecedented."

According to a report by Axios, Neil Saunders, managing director of GlobalData, said Walmart's comments would help other retailers justify their own price increases.

"If a low-price-focused player like Walmart is putting up prices, it explains why others may follow suit," said Saunders.

(With input from Xinhua)