As the owner of a small music shop specializing in mandolins, violins, and related accessories—strings, bows, cases, and rosin—I’ve built my business on passion for these instruments and a reliable supply chain. For years, I’ve sourced all my inventory from suppliers in China, where quality craftsmanship meets affordability. But with President Trump’s proposed 104% tariffs on Chinese goods looming on the horizon, I’ve been forced to crunch the numbers. The results? Devastating. If these tariffs hit, my shop could face a loss of $32,000 a year unless I make drastic changes. Here’s a detailed breakdown of how I got there—and what it means for small businesses like mine.
My Shop’s Financial Baseline
Let’s start with where I stand today, pre-tariff. My shop brings in $100,000 in annual sales—a figure I’ve worked hard to maintain through loyal customers and careful pricing. Like most small retail businesses, my costs break down into two big buckets: the cost of goods sold (COGS) and operating expenses.
Cost of Goods Sold (COGS): This is what I pay my Chinese suppliers for mandolins, violins, and accessories. Based on typical retail markups (around 50% for music shops), I estimate my current COGS at $50,000. That means for every $100 mandolin I sell, I’m paying $50 to get it on the shelf.
Operating Expenses: Rent for my storefront, utilities, a part-time employee’s wages, and basic marketing add up to about $30,000 a year—30% of my revenue, which is fairly standard for a shop like mine.
Profit: Before any tariffs, my profit is straightforward: $100,000 (revenue) - $50,000 (COGS) - $30,000 (expenses) = $20,000. That’s a 20% profit margin—enough to keep the lights on, reinvest in inventory, and maybe take my family out for a nice dinner now and then.
This model has worked. It’s not lavish, but it’s sustainable. Then came the tariff talk.
The Tariff Bombshell: 104% on Chinese Goods
The proposed 104% tariff would apply to every mandolin, violin, bow, and string I import from China—which is everything I sell. Since my suppliers are all based there, the tariff hits 100% of my inventory. Here’s what that does to my numbers:
Pre-Tariff COGS: $50,000, as established.
Tariff Cost: A 104% tariff on $50,000 worth of goods is an additional 104% × $50,000 = $52,000. That’s right—the tariff alone costs more than my entire current inventory spend.
New COGS with Tariff: $50,000 + $52,000 = $102,000. Suddenly, the cost of my mandolins and violins more than doubles.
Now, let’s assume I don’t raise prices right away. Maybe I’m hoping to keep my customers happy or ride out the storm. With sales holding steady at $100,000, my new financial picture looks grim:
New Profit (or Loss): $100,000 (revenue) - $102,000 (new COGS) - $30,000 (expenses) = -$32,000.
That’s a $32,000 loss annually—a swing from a $20,000 profit to a $32,000 deficit. My shop wouldn’t just struggle; it’d be underwater in a matter of months.
Double-Checking the Math
Let’s test this with a slightly different baseline, just to be thorough. Suppose my COGS was lower—say, $40,000—because I’ve negotiated great deals with my suppliers (a 60% gross margin isn’t unheard of in this industry):
- Pre-Tariff Profit: $100,000 - $40,000 - $30,000 = $30,000.
- Tariff Cost: 104% × $40,000 = $41,600.
- New COGS: $40,000 + $41,600 = $81,600.
- New Profit: $100,000 - $81,600 - $30,000 = -$11,600.
Even in this rosier scenario, I’m still losing $11,600 a year. The tariff’s impact scales with my costs, but it’s always a gut punch.
Why This Hurts So Bad
The numbers tell a stark story. A 104% tariff doesn’t just nibble at my margins—it obliterates them. My current business model assumes I can sell a $100 mandolin for twice what I pay, leaving room for expenses and a modest profit. Post-tariff, that same mandolin costs me $104 before I even account for shipping or duties, and I’m still selling it for $100. I’d be losing money on every sale before I even pay the rent.
And here’s the kicker: I assumed sales stay at $100,000. That’s optimistic. If I did raise prices to offset the tariff—say, marking up that mandolin to $150—some customers might balk. Violinists and mandolin players are a dedicated bunch, but they’re not immune to sticker shock. Sales volume could drop, making the revenue picture even bleaker.
What Can I Do? Exploring Options
A $32,000 loss isn’t a business—it’s a countdown to closure. So, what are my options?
- Raise Prices: If I passed the full $52,000 tariff cost to customers, my revenue would need to jump to $152,000 just to break even ($152,000 - $102,000 COGS - $30,000 expenses = $0). That’s a 52% price hike across the board. A $20 set of strings becomes $30.40; a $200 violin jumps to $304. I’d keep my head above water, but I’d risk losing customers to competitors or online giants.
- Cut Costs: Could I slash operating expenses? Maybe negotiate rent down to $25,000 or cut my employee’s hours, trimming expenses to $20,000. That softens the loss to $100,000 - $102,000 - $20,000 = -$22,000—still a loss, but less catastrophic. It’s a Band-Aid, not a fix.
- Switch Suppliers: Sourcing mandolins and violins from Vietnam, Indonesia, or even domestic luthiers could dodge the tariff. But it’s not that simple. Non-China suppliers might charge more upfront (say, $60,000 instead of $50,000), and transitioning takes time—time I might not have while bleeding cash. Plus, my customers love the specific brands I carry, many of which are China-made.
- Hybrid Approach: Maybe I raise prices a little, cut costs a bit, and slowly shift some inventory to non-China sources. It’s a juggling act, and I’d need to model it carefully.
The Bigger Picture for Small Businesses
My shop isn’t unique. Thousands of small retailers—music stores, toy shops, electronics sellers—rely on Chinese goods to keep prices competitive. A 104% tariff doesn’t just hit me; it ripples through Main Streets everywhere. Sure, the policy aims to boost domestic manufacturing, but in the short term, it could sink businesses like mine before we can adapt. And with a $32,000 loss staring me in the face, “short term” might be all I’ve got.
Where Do I Go From Here?
I’m not ready to hang a “Closed” sign on my door. I’ll start by talking to my suppliers—maybe they can absorb some of the tariff hit or point me to alternatives. I’ll survey my customers: would they pay more for the same mandolins and violins? I’ll crunch more numbers, maybe even blog about my next steps. But one thing’s clear: a 104% tariff turns my $20,000 profit into a $32,000 loss overnight. That’s not a challenge—it’s a crisis.
If you’re a fellow small business owner or a musician who loves a good deal on a fiddle, I’d love to hear your thoughts. How would you handle this? Because right now, I’m tuning up for a fight I didn’t see coming.
