Eighty percent of small American businesses that buy from China will "just die," Flexport CEO Ryan Petersen said during an April 24 appearance on “The Prof G Pod,” a podcast hosted by Scott Galloway.
Petersen warned that the U.S.’s 145% tariff on Chinese imports could lead to “mass bankruptcies” and widespread job losses across the country.
Petersen, who founded Flexport in 2013 and raised $935 million in 2022 at an $8 billion valuation, explained that most products affected are not essentials. “We have customers that buy pizza ovens in China, like for your backyard,” he said.
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“They’re really cool products. When the price goes up 50% or more, you might go out and buy pizza from Domino’s or something.” Petersen suggested the government could ultimately “back down” from the trade war as the pressure mounts.
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Tariff Chaos Hits Small Importers First
Flexport has already seen a sharp 35% decline in ocean freight bookings from China within a week of the tariff rollout, Peterson posted on X on April 17. This early signal reflects growing uncertainty among small importers, many of whom lack the financial buffer to absorb sudden cost hikes.
Business owners across industries are struggling. Chelsey Brown, owner of the home décor company Curio Blvd told the Financial Times she had to stop operations entirely. Jacob Sendowski, co-founder of Souper Cubes, estimated it would cost millions to relocate production away from China.
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De Minimis Change Fuels Tension
Adding to the pressure, the U.S. eliminated the de minimis exemption on May 2, requiring tariffs on low-value parcels previously exempt. The move will affect over 4 million small shipments from China daily, according to the Associated Press, intensifying costs for sellers relying on direct-to-consumer shipping models.
The tariff escalation is already triggering legal pushback. Five small businesses from various states have filed suit in the U.S. Court of International Trade, arguing that the administration’s use of the International Emergency Economic Powers Act violates the Constitution’s separation of powers.
Economy Shows Signs of Strain
U.S. gross domestic product shrank 0.3% in Q1 2025—the first contraction in three years—due to falling imports and reduced government spending. This economic downturn is being closely watched as inflation and trade disruptions continue to ripple.
"I may not want to go higher, or I may not want to even go up to that level… because you want people to buy," President Donald Trump told reporters on April 17, signaling he might not escalate tariffs further.
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Airlines, Farmers Brace for Fallout
The pain isn’t limited to retail. The New York Post reported last week that U.S. farmers are facing a “full-blown crisis” after China canceled 12,000 tons of pork orders and slashed soybean purchases by 97% in one week.
In the aviation sector, Southwest Airlines LUV CEO Bob Jordan told Bloomberg in an interview late last month that the airline industry is already in a recession. “When consumers are uncertain, they pull back. Consumers can immediately stop spending,” he said.
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