Tariffs Are Breaking Fixed-Price Contracts for Small Suppliers

A small company that sells housewares and sewing supplies primarily to schools operates under a common but rigid system: year-long state contracts. Once those contracts are signed, prices are locked in — even if costs change months later. That’s exactly what happened when tariffs took effect.

Most school orders arrive eight months after contracts are signed, long after suppliers began raising prices. Some increases were steep — 20% to 40% — even on products labeled “Made in the USA,” which still rely on imported parts.

As the company explained:

“When schools placed their orders, I had to either eat the cost or tell the school we couldn’t supply the item.”

Neither option was sustainable. Absorbing the costs meant operating at a loss. Refusing to fill orders meant losing business and disrupting school purchasing plans. Ultimately, the company was forced to raise prices across much of its catalog — a move that hurt both the business and its customers.

This experience shows how tariff volatility doesn’t just affect imports — it collides directly with fixed-price contracts and public-sector procurement, creating stress, uncertainty, and higher costs throughout the system.

📢 If your small business has been directly affected by tariffs, consider adding your experience to our open letter to help show how these policies play out in real contracts and real budgets.