When President Donald Trump announced a wide range of tariffs on April 2, Matt Rollens says he felt the entire room's mood shift.
"It was pretty shocking," says Rollens, who was surrounded by hundreds of fellow business owners at a trade show in Las Vegas at the time. "It definitely put a big damper on everyone's mood, for sure. Everyone was worried about it, thinking about [the announcement]. And then when it happened, it was like, 'Oh, my God. [It's] way worse than anybody anticipated.'"
While many of those country-specific tariffs have since been paused for at least 90 days, the Trump administration on Wednesday placed additional tariffs on goods coming to the U.S. from China, climbing to a total rate of 145%.
Rollens, 39, is among the many American business owners reckoning with the implications of that price hike. He's the owner and CEO of Granite Bay, California-based novelty drinkware company Dragon Glassware, which employs four people full-time and averages roughly $5 million in annual revenue, according to documents reviewed by CNBC Make It.
The business makes and sells branded drinkware, from cocktail glasses to stainless steel tumblers, tied to popular film and television franchises, like "Barbie" and "Wicked." It sells primarily through retailers like Amazon and Walmart, and like many small American retail businesses, its products are manufactured in Chinese factories.
Ahead of Trump's April 2 announcement, Rollens prepared for higher business costs and thought about how long he could "eat the cost" of tariffs higher than 20%.
At 145%, the burden is untenable, he says: The China tariffs are a "doomsday scenario for small businesses ... which will put most of us out of business within months."
Relocating away from Chinese factories isn't just 'a matter of cost'
Rollens joins a chorus of American business owners, and organizations that represent them, who've spoken out against tariff policies that they say could increase their expenses, raise prices for customers and potentially shutter their companies.
The Trump administration has touted tariffs' potential to boost domestic manufacturing. Rollens says that's not realistic for small businesses like his.
He doesn't have the resources to "build our own factory here," and the appeal of Chinese manufacturing goes beyond production expenses, he says: "It's not even a matter of cost. It's a matter, really, of specialty and expertise."
One of Dragon Glassware's factories employs a glass mold maker with decades of experience, and the expertise to make products exactly to specifications, says Rollens.
"This guy's been doing this for 40 years. He's the expert [and] he's unbelievable," he says. "Does that person exist in the U.S.? I don't know. Probably not."
China was the second-largest supplier of U.S. goods in 2024, after only Mexico, according to U.S. Census Bureau data. And a 145% tariff is too steep for most importers to even consider bringing goods into the U.S., effectively shutting down trade with one of the country's largest trading partners, Erica York, the vice president of federal tax policy at the Tax Foundation's Center for Federal Tax Policy told CNBC's "The Exchange" on Thursday.
"Generally, if you get north of a triple-digit tariff, you are cutting off most trade," York said. "There may still be some things without any substitutes that companies just have to foot the bill, but for the most part, that cuts it off."
'The longer it drags on, the worse it's going to get'
With policies shifting quickly — the Trump administration has publicly altered its China tariff plans four times in 10 days — Rollens is temporarily holding his products in China, hoping to wait out the budding trade war between the two countries. He has enough inventory stateside to last roughly until June, he says.
His options are limited. If he brings in a new shipment of products under current policies, he'll pay a tax levy of 145% of their total declared value, paying up front to access products he hasn't sold yet. Doing so would likely force Rollens to raise prices by at least 50% — a jump that could dry up consumer demand and leave him with unsold inventory, giving him no way to recoup the import costs, he says.
Rollens would also have to negotiate any price increases with his retail partners, with whom he reached price agreements months ago for products slated to ship this summer. "That's the hardest conversation you can have" as a business owner, he says. "It's quite a mess."
Without a timely resolution, Rollens says his business will suffer. Typically, this is the time of year when Rollens starts planning new products for the 2025 holiday shopping season, a busy time for every retailer. Those plans are currently paused, and instead of projecting business growth this year, he's merely hoping to keep "treading water and ... stay afloat."
He's optimistic, because he predicts that Trump will roll back the China tariffs within the next couple months. "I think this can only drag on for so long," he says.
But if the tariffs remain in place at their current rates past June, he'll likely face the prospect of laying off employees or shutting down operations altogether, he notes.
"The longer it drags on, the worse it's going to get," says Rollens.
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