‘It’s Awful’: Tariffs, Fuel Costs and Interest Rates Are Squeezing American Companies

American businesses are being pressed from several directions at once, and for many of them the math is no longer working.

Tariffs have raised the landed cost of imported components and finished goods. Fuel prices have climbed, pushing up the cost of moving those goods once they arrive. And interest rates remain high enough that borrowing to bridge the gap — or to invest in a way out of it — is expensive. Individually, each pressure is manageable for a well-capitalized firm. Together, they are squeezing margins in a way that executives describe in blunt terms.

Three pressures, one balance sheet

The first squeeze is on inputs. Companies that rely on imported parts, raw materials or packaging have seen duties add a direct cost to every unit they buy. Larger firms can sometimes negotiate with suppliers, shift sourcing to other countries or absorb the hit temporarily. Smaller firms, which often lack alternative suppliers and have thinner cash cushions, have fewer options.

The second squeeze is logistics. Fuel is embedded in nearly every step of a supply chain — ocean freight, rail, trucking, last-mile delivery. When fuel prices rise, carriers pass along surcharges, and those surcharges land on shippers regardless of whether their own sales are growing. For businesses with low-value, high-volume goods, transportation can be a decisive share of total cost.

The third squeeze is financing. Higher interest rates make working capital lines, equipment loans and commercial mortgages more expensive. That matters most for companies carrying floating-rate debt or facing refinancing. It also raises the bar for capital projects: automation, new equipment or a domestic factory intended to sidestep tariffs may pencil out at low rates but not at high ones. In effect, the cost of adapting has gone up at the same moment adaptation became necessary.

Passing it on — or not

The classic response is to raise prices. But consumers and business customers have limits, and firms that push too far risk losing volume to competitors willing to accept slimmer margins. Many companies end up splitting the difference: modest price increases, quiet reductions in package size or service levels, and internal cost cutting.

That cost cutting often shows up first in discretionary spending — travel, marketing, delayed maintenance — and then in hiring. Pausing open positions is a less painful lever than layoffs, but it slows the broader labor market all the same.

Who feels it most

Small and midsize businesses are typically the most exposed. They have less purchasing power with suppliers and carriers, less ability to hedge fuel or currency, and less access to cheap credit. Manufacturers, retailers, distributors, restaurants and construction firms all sit in the path of at least two of the three pressures.

Larger corporations are not immune, but they have more tools: diversified supply chains, long-term contracts, hedging programs and bond-market access.

What to watch

The key question is duration. Companies can absorb a bad quarter; sustained pressure forces structural change — relocating production, exiting product lines, consolidating or closing. Watch corporate guidance, small-business sentiment surveys, freight volumes and delinquency rates on commercial loans for early signals.

For now, many operators are doing what businesses under pressure always do: trimming where they can, raising prices where they dare, and waiting to see which of the three pressures eases first. Read More