The Ramsey Show Highlights: "The Tariffs Are Hurting My Business"
Release Date: May 1, 2025
Introduction
In this episode of The Ramsey Show Highlights, host Dave Ramsey tackles the pressing issue of tariffs and their impact on small businesses. Sponsored by the Ramsey Network, the show features insights from financial experts like Rachel Cruze. This episode centers around a caller named David, who seeks advice on navigating the financial challenges posed by recent tariff increases affecting his business operations.
Caller’s Dilemma: Heavy Tariffs Impacting Business Costs
David, a long-time follower of the Ramsey Plan, shares his predicament concerning significant tariff hikes imposed on his business's recent equipment investment.
“I own a business and in December I made our largest ever investment in equipment. ... two days ago I was told if I want to import it, it's going to cost 80% of what I paid just for the product. But now with Today's news, what, 145%.”
— David [00:06]
Having paid in full upfront for equipment from China, David faces unexpected tariff increases that could escalate his costs from 80% to as high as 300%, threatening his business's financial stability.
Dave Ramsey’s Reaction: Expressing Frustration Over Trade Policies
Dave Ramsey responds with palpable frustration towards the unpredictability of trade policies, particularly those influenced by political actions.
“Tariffs are taxes and we have never in the history of this great country taxed our way into prosperity. And it's the Davids of the world that are going to get hit hard on this.”
— Dave Ramsey [01:08]
Ramsey emphasizes that tariffs, akin to taxes, place undue strain on small business owners who diligently follow financial plans to maintain stability.
Analyzing the Financial Impact: Sunk Costs and Future Risks
David seeks clarity on whether to absorb the increased tariff costs or wait in hopes that tariffs will decrease in the future.
“Do I pay the 80% or even now 145% or 300%, like whatever it is, or do I wait to see if it comes down?”
— David [01:33]
Ramsey advises David to assess the broader impact on his business, urging him to consider worst-case scenarios to make informed decisions.
“So, so the question I have for you is if, let's just assume, let's play this out as though you got scammed and you paid for this and you're never going to get the equipment. Where does that put you in your actual business?”
— Dave Ramsey [02:16]
Strategic Advice: Delaying Shipment and Managing Costs
After evaluating the situation, Dave Ramsey recommends delaying the shipment of the equipment, suggesting that waiting could mitigate further financial strain.
“So if it were me, I'd wait to see what happens. Because of what you said, I would delay shipment. Absolutely. I would delay.”
— Dave Ramsey [03:58]
Rachel Cruze further explores the practical aspects of this strategy, questioning the costs associated with renting equipment in the interim.
“How much does it cost, David, to rent what you're going to do? How much will that be out of pocket?”
— Rachel Cruze [04:26]
David outlines the potential rental costs, estimating around $4,000 for the first event and $8,000 to $9,000 for the second, indicating that these expenses are manageable compared to absorbing the increased tariffs.
“So that's not too much. It depends on the size. ... for the first event, it's going to cost maybe about four grand. The second event, it's going to cost maybe about eight or nine grand.”
— David [05:00]
Broader Implications: The Impact of Geopolitical Decisions on Small Businesses
Dave Ramsey broadens the discussion to highlight how geopolitical decisions, such as trade wars, disproportionately affect small businesses.
“You got to be able to withstand economic ups and downs that sometimes are policy driven. So hopefully this all gets settled pretty soon.”
— Dave Ramsey [06:10]
He underscores the importance of financial resilience, advising business owners to maintain cash reserves and avoid debt to navigate unpredictable economic landscapes.
“If you're a small business owner like a David now is a great reminder that you cannot control geopolitics, but you can control is socking money away. And don't get in debt because David is actually able to weather what could be a really ugly storm because of that.”
— Dave Ramsey [06:16]
Conclusion: Emphasizing Financial Prudence and Adaptability
Wrapping up the discussion, Dave Ramsey reiterates the necessity for small businesses to be financially prudent and adaptable in the face of external economic pressures.
“So taxes come from hell, and so they're related. That's my take on it. And so I would sit tight. And I'm really sorry this is happening. I'm really sorry.”
— Dave Ramsey [05:48]
He encourages listeners to utilize budgeting tools like the EveryDollar app to manage finances effectively, ensuring that businesses remain resilient against unforeseen challenges.
“Create your free every dollar budget today. The simplest way to budget for your life.”
— Dave Ramsey [07:46]
Key Takeaways
- Understanding Tariffs: Tariffs can drastically increase the cost of imported goods, severely impacting small businesses.
- Financial Resilience: Maintaining cash reserves and avoiding debt are crucial strategies for weathering economic uncertainties.
- Strategic Decision-Making: Delaying large expenditures or shipments can provide flexibility in managing rising costs.
- Geopolitical Impact: External economic policies, such as trade wars, have tangible effects on small business operations and profitability.
- Practical Advice: Utilizing budgeting tools and being adaptable can help businesses navigate through financial challenges effectively.
For more insights and daily financial advice, tune into The Ramsey Show Highlights delivered by the Ramsey Network, available seven days a week.