“I PROBABLY SHOULDN’T say this, but when you see one cockroach, there are probably more.” Jamie Dimon, boss of JPMorgan Chase, America’s biggest bank, offered a warning on October 14th that the recent blow-ups of Tricolor, an auto lender, and First Brands, a car-parts-maker, might not be the last problems faced by America’s credit market. More
The CBOE Volatility Index, otherwise known as the Wall Street’s fear gauge, is coming off its most volatile week since April.
For investors hesitant to ride out the recent wild swings, Invesco senior portfolio manager John Burrello sees income funds that employ options-based strategies as a sound game plan. His reasoning: They have more structural protection embedded in them.
“Options are not reliant on the correlations of stocks with another… asset class,” Burrello told CNBC’s “ETF Edge” this week. “They can have a more reliable form of downside protection, and also can offer income that’s not interest rate sensitive.”
Burrello, who serves on Invesco’s global asset allocation team, suggests that should serve as an advantage to investors due to the rate cutting cycle. Policymakers are expected to cut rates by a quarter point later this month, according to the consensus on Wall Street.
“Adding income without reliance on the Fed is becoming more and more important. I think that’s driving some growth in the space,” he noted.
Invesco’s income-generated funds include Invesco QQQ Income Advantage ETF, Invesco S&P 500 Equal Weight Income Advantage ETF and the Invesco MSCI EAFE Income Advantage ETF.
So far this year, the Invesco MSCI EAFE Income Advantage ETF has gained about 14%, while the firm’s QQQ Income Advantage ETF is up about 6%. They’re also up about two percent over the past week.
Meanwhile, the Invesco S&P 500 Equal Weight Advantage ETF is virtually flat for the year.
‘Never go out of style’
According to Burrello, there’s a “very large tailwind” for options and defined outcome strategies could last for many years.
“The demand themes of income and defense against equity drawdowns should never go out of style,” Burrello said. “Those are things that every portfolio likely needs at some point throughout someone’s life. They might want to reduce risk to equities. They also might want to add income that’s a diversifying source, and, again, not relying on interest rates.”
Burrello finds the option income space has attracted a lot of new product launches thay could make it challenging for investors to understand the differences.
His advice: Look for option income ETFs managed by institutional-grade options professionals, beware of unsustainable yields with potentially high fees.
Disclaimer More
Sales of collectible trading cards like Pokémon and sports sets are surging, with Target reporting a 70% year-to-date increase and expecting over $1 billion in annual revenue from the category.
Despite strong growth, analysts caution that trading card sales may not see a major holiday spike since many purchases are for personal enjoyment rather than gifting.
Retailers like Target and Walmart are aiming to capture shoppers’ attention with exclusive sets, eye-catching out-of-aisle displays and limited time deals.
Trading cards of the game “Magic” are located in a shop where a “Magic” tournament is taking place.
Frank Rumpenhorst | picture alliance | Getty Images
As screentime soars and technology races ahead, a low-tech pastime is back in a big way: collecting trading cards.
The cardstock depicting everything from NFL standouts to Pokémon and even Taylor Swift is one of the hottest toy categories in stores this year. Big-box retailers are stocking up ahead of the holidays, anticipating that demand will extend beyond traditional toy buyers like children and collectors.
“We see trading cards being a hot gifting category for all ages that we will fuel with newness and with exclusive drops,” Rick Gomez, Target’s executive vice president and chief commercial officer, told CNBC. “We’re going to have new releases nearly every week during the holidays that’s going to drive demand. And these make for great gifts and great stocking stuffers.”
Strategic trading card sales — which exclude sports — are up 103% year-to-date through August, while non-strategic card sales, which tend to be collectible pop culture or sports cards, are up 48%, according to market research firm Circana.
Target’s trading card sales are up nearly 70% year-to-date, with annual revenue from the category expected to top $1 billion.
Sales on some online platforms are rising even faster. Walmart Marketplace reported a 200% jump in trading card sales from February 2024 to June 2025, with Pokémon sales up more than tenfold year-over-year during the same period, the company first told Axios. The retailer has even launched a new weekly influencer livestream series focused on sports collectibles.
Since 2021, strategic card sales have grown by $891 million, or 139%, to total $1.5 billion, according to Circana. Sales of non-strategic cards and collectible stickers climbed by $565 million, or 156%, to $925 million in the same period, Circana said.
Millennials and Gen Z customers have been crucial for growth, said Juli Lennett, vice president and industry advisor for Circana’s U.S. toys practice.
“Lots of adults are buying these because it brings them back to a time when they had no cares in the world,” Lennett said. “It’s an affordable luxury with the economy right now. Some couldn’t afford cards as kids and now they have their own money and no one’s there to say ‘no’.”
Some buyers also treat cards like alternative investments. Through August, the value of Pokémon cards has delivered a cumulative return of 3,821% since 2004, according to an index by analytics firm Card Ladder, the Wall Street Journal reported. To combat online resellers, many stores now limit purchases to two packs per customer.
While the trading card category has boomed this year, not everyone is convinced the segment will boost sales during the peak holiday shopping season. Within the past six months, 19% of adults said they purchased Pokémon cards for themselves, signaling they may not be buying them for others in the weeks ahead, according to Circana.
“There has been steady growth in the category, but a large chunk of buyers are purchasing for themselves. There isn’t as much gifting here as you see in other toys,” Lennett said.
Pokemon cards released in 1999
Yvonne Hemsey | Hulton Archive | Getty Images
A year-round rush
What trading cards may lack in holiday flair, they make up for in consistency.
Cards stand apart from most toy categories in two key ways: they are frequently self-purchased and not “super seasonal,” Lennett said.
“Cards sell just as well in March or July as they do in December,” she said. “That makes them very attractive to retailers trying to offset seasonal risk.”
Target, which often gets a bump from merchandise tied to holidays, has tried to capitalize on the year-round fervor for cards.
“We expanded our assortment. We increased the number of drops that we have. We put trading cards in a more prominent place in store, did bolder displays and the business has responded,” Gomez said. “We don’t see the business slowing and we see it continuing to grow in popularity.”
Pokémon remains the category’s top performer, with card sales topping $1 billion last year — it’s the first toy brand to hit that milestone in the U.S., according to Circana. Sports cards are also becoming more popular, particularly among teen boys, with NFL packs leading the charge.
“A lot of different people are coming in to buy. You have your adult collector who’s buying for themselves, but we also see a lot of families coming in with kids requesting them and asking their parents for trading cards,” Gomez said. “It’s a great gift for parents, for kids, especially if they know that they’re into sports or Pokémon.”
While contemporary releases are booming across people aged eight to 28, vintage cards — typically pre-1970s — haven’t connected as strongly with Gen Z and Gen Alpha collectors.
“The majority of my customers aren’t looking for vintage,” Matthew Winkelried, CEO of New York-based Bleecker Trading, told CNBC. “Younger people don’t want to dig through 1960s cards unless they see a Mickey Mantle or Hank Aaron. Plus, the scarcity and price of vintage cards make it a tough entry point.”
Topps trading cards are arranged for a photograph in Richmond, Virginia.
Jay Paul | Bloomberg | Getty Images
Changing customers
After a near-collapse in the 1990s due to overproduction, the trading card industry has rebounded. Growth has been particularly strong since the pandemic, propelled by a blend of nostalgia, community and, for some, investment potential.
For many, cards offer a sense of belonging — whether it’s exchanging cards or playing a game like Pokémon or Magic: The Gathering.
“You still have the game players, and that’s a really tight-knit community,” said Jason Howarth, senior vice president of marketing and athlete relations at Panini America, which supplies sports cards to retailers like Target and Walmart. “Among sports fans, there’s a huge sense of camaraderie around trading. And with Pokémon too, I’ve heard game nights still play a major role in keeping that ecosystem alive.”
For those looking to cards as a store of value, Pokémon cards often prove to be a stronger investment than their sports counterparts, said Winkelried of Bleecker Trading.
“Maybe a highly touted rookie joins the league, and you buy their card early hoping it’ll rise in value,” he said. “The value can change week to week. It’s volatile like a stock.”
He added: “Pokémon is like a commodity. Pikachu can’t tear an ACL or get a DUI. Supply is limited, so the market is more stable.”
Looking past the holidays, major retailers are focusing on building the category’s long-term future. Target is betting on exclusive sets, limited specialty drops and drawing a more diverse consumer base.
“We are looking at reaching not only breadth of age with trading cards, but also gender,” Gomez said.
That process is already underway. The WNBA is now one of the fastest-growing segments in sports cards, particularly among young girls.
And with the 2026 FIFA World Cup spanning the U.S., Canada, and Mexico, soccer is poised to surge next.
“Caitlin Clark, Paige Bueckers and Angel Reese have done wonders for the WNBA trading card business,” Howarth said. “Once it hits June, the U.S. marketplace is going to be taken over by soccer. Fans already know the global stars like Messi, but with the World Cup being held here, at least four or five players will skyrocket in popularity and get recognized.” More
Thursday’s selloff among regional banks drew comparisons to the 2023 banking crisis that consumed Silicon Valley Bank and First Republic.
Zions and Western Alliance are suing a borrower over alleged loan frauds tied to non-depository financial institutions, or NDFIs.
NDFIs are a fast-growing category of loans made by non-bank financial firms but often funded by regional banks and global investment banks alike.
Big banks including JPMorgan Chase and Goldman Sachs had just finished taking victory laps after a blockbuster quarter when concerns emerged from an obscure corner of Wall Street, sending a collective shiver through global finance.
Regional bank Zions late Wednesday disclosed a near total wipeout on $60 million in loans after finding “apparent misrepresentations” from the borrowers. The next day, peer Western Alliance said that it had sued the same borrower, a commercial real estate firm called the Cantor Group, for alleged fraud.
The result was a sudden and deep selloff among regional banks, drawing comparisons to the churn of the 2023 banking crisis that consumed Silicon Valley Bank and First Republic. This time around, investors are focused on a specific type of lending made by banks to non-depository financial institutions, or NDFIs, as the source of possible contagion.
“When you see one cockroach, there are probably more,” JPMorgan CEO Jamie Dimon said this week. “Everyone should be forewarned on this one.”
Concerns over credit quality had been simmering for weeks after the September collapse of two U.S. auto-related companies. JPMorgan, the biggest U.S. bank by assets, this week reported a $170 million loss tied to one of them, the subprime auto lender Tricolor.
But it wasn’t until a third case of alleged fraud around loans made to NDFIs that investors were jolted into fearing the worst, according to Truist banking analyst Brian Foran.
“You now have had three situations where there was alleged fraud” involving NDFIs, Foran said.
Dimon’s comments “really resonated with people who were like, ‘Oh, man, the tide went out a little bit, and now we’re seeing who was lacking their swim trunks,” Foran said.
What are NDFIs?
The episode cast a spotlight on a fast-growing category of loans made by regional banks and global investment banks alike. Rules put into place after the 2008 financial crisis discouraged regulated banks from making many types of loans, from mortgages to subprime auto, leading to the rise of thousands of non-bank lenders.
Moving riskier activities outside of the regulated bank perimeter, where failures are backstopped by the Federal Deposit Insurance Corporation, seemed like a good move.
But it turns out, banks are a major source of funding for non-bank lenders: commercial loans to NDFIs reached $1.14 trillion as of March, per the Federal Reserve Bank of St. Louis.
Bank loans made to non-bank financial firms were the single fastest-growing category, rising 26% annually since 2012, according to the St. Louis Fed.
“The surge in NDFI lending was really because all these different regulations added up to say there are a bunch of loans banks can’t do anymore, but if they lend to someone else who does them, that’s OK,” Foran said.
“We really don’t know much about these NDFI books,” Foran said. “People are saying, ‘I didn’t know it was so easy for a bank to think they had $50 million in collateral and find out they had zero.'”
‘Overreaction’ or early?
Part of what’s spooking investors is that, while some of the loan losses disclosed have been relatively small, they’ve been near total wipeouts, said KBW bank analyst Catherine Mealor.
“NDFI lending, because of the collateral involved, typically has a higher loss rate, and the losses can come very quickly and out of nowhere,” Mealor said. “It’s really hard to wrap your mind around these risks.”
Mealor said investors have been inundating her with questions around the level of NDFI exposures in her coverage universe, the analyst said. Firms including Western Alliance and Axos Financial are among those with the highest proportion of NDFI loans, according to an August research note from Janney Montgomery.
Still, regional banks are benefitting from an improving interest rate environment and rising mergers activity, which underpin valuations, Mealor said, adding she thinks this week’s stock selloff was an “overreaction.”
“You want to avoid companies that show up high in the screen for NDFI loans,” she said. “There are plenty of high-quality companies in the KRX that are trading at a massive discount.”
Correction: This article has been updated to remove an incorrect mention of losses at one of the regional banks tied to the alleged loan fraud. More
Shares of Eli Lilly and Novo Nordisk dropped Friday, after President Donald Trump said his administration aims to cut the cost of brand name GLP-1 weight loss drugs to $150 per month, a fraction of their current list price.
Centers for Medicare and Medicaid Administrator Dr. Mehmet Oz interjected and stressed that the administration has not yet agreed to GLP-1 price reductions with drugmakers.
Shares of Hims & Hers Health plunged because that cash price for branded GLP-1s would be lower than even compounded alternatives.
Shares of Eli Lilly and Novo Nordisk dropped Friday, after President Donald Trump said his administration aims to cut the cost of brand name GLP-1 weight loss drugs to $150 per month, a fraction of their current list price.
“In London, you’d buy a certain drug for $130 and even less than that … $88 as of… a month ago. And in New York, you pay $1,300 for the same thing,” Trump said during a Thursday afternoon event about in vitro fertilization at the White House. “Instead of $1,300 you’ll be paying about $150 and they’ll be paying $150 so we’re going to pay the same thing.”
Asked by a reporter what drug he was referring to, Trump replied, “I was referring to Ozempic or … the fat loss drug.”
At that point, Centers for Medicare and Medicaid Administrator Dr. Mehmet Oz interjected and stressed that the administration has not yet agreed to GLP-1 price reductions with drugmakers.
“We have not negotiated those yet … We’re going to be rolling these out over time, the GLP category of drugs, which includes Ozempic have not been negotiated yet,” Oz said.
Just a week ago, Oz had said that the administration was “in the middle of a lot of action” with price discussions with weight loss drugmakers.
Eli Lilly shares closed 2% lower Friday, while Novo Nordisk’s stock fell 3% in U.S. trading. Meanwhile, shares of Hims & Hers Health — which sells much cheaper compounded GLP-1s — plunged more than 15%.
Eli Lilly and Novo Nordisk were among 17 of the largest U.S. pharmaceutical companies that received letters from the Trump administration following the president’s executive order on so-called most-favored nation pricing, demanding that businesses bring U.S. drug prices in line with those in other developed nations.
Pfizer and AstraZeneca have signed on to the president’s initiative, striking drug pricing deals with the administration. But Trump and Oz’s comments make it clear the administration is looking to get the weight loss drugmakers on board.
$150 GLP-1 would be cheaper than compounders
While demand for weight loss drugs has grown, price has remained an obstacle for consumers and employers.
Only about one in five large employers currently offer GLP-1s for weight loss, according to a new survey from the Kaiser Family Foundation. Of those who do, two-thirds say the high cost drugs have had a “significant” impact on their prescription drug spending.
Workers who don’t get coverage through health insurance have increasingly turned to the cash market to buy the drugs on their own.
Eli Lilly and Novo Nordisk sell discounted versions of their diabetes and weight loss medications on their direct-to-consumer sites at roughly $500 a month. Telehealth providers like Hims & Hers offer compounded versions of GLP-1s for less than half that price, anywhere between $130 to $200 per month.
If the administration could bring the cash price for popular weight loss drugs like Lilly’s Zepbound and Novo Nordisk’s Wegovy down to $150, that would be competitive with compounded options and could have a major impact on the current cash market. More
The FAA said Boeing can produce 737 Max planes at 42 a month, above the 38 a month limit Boeing had been producing at.
Boeing CEO Kelly Ortberg had said the company expects to ramp up more in the future.
It’s a milestone for the manufacturer, which hasn’t turned an annual profit since 2018.
Boeing 737 Max aircraft are assembled at the company’s plant in Renton, Washington, U.S. June 25, 2024.
Jennifer Buchanan | Via Reuters
Boeing has won regulator approval to ramp up production of its best-selling 737 Max jetliners to 42 a month, a milestone for the manufacturer nearly two years after the Federal Aviation Administration capped its output after a midair near-catastrophe.
In January 2024, the FAA restricted Boeing to building the planes at a rate of no more than 38 a month — though it had been below that level at the time — after a door plug from a nearly new 737 Max 9 blew off from an Alaska Airlines flight as it climbed out of Portland, Oregon.
Boeing failed to reinstall key bolts on the door plug before it left the factory, a National Transportation Safety Board report found. The 737 Max returned and landed safely, but it put the company back into crisis mode just as leaders were expecting a turnaround year.
The FAA said Friday that it would still oversee Boeing’s production. “FAA safety inspectors conducted extensive reviews of Boeing’s production lines to ensure that this small production rate increase will be done safely,” the agency said in a statement.
Boeing said it would work with its suppliers to increase production.
“We appreciate the work by our team, our suppliers and the FAA to ensure we are prepared to increase production with safety and quality at the forefront,” Boeing said Friday in a statement.
Read more CNBC airline news
An increase in output is key to the company’s turnaround after years of problems, since airlines and other customers pay for the bulk of an aircraft when they receive it. CEO Kelly Ortberg, named last year to stabilize the top U.S. manufacturer, said last month he expected to soon win FAA approval to raise output to 42, with other increases planned for down the line.
“We’ll go from 42 and then we’ll go up another five, and we’ll go up another five,” Ortberg told a Morgan Stanley investor conference in September. “We’ll get to where that inventory is more balanced with the supply chain, probably around the 47 a month production rate.”
The change shows the FAA’s softening tone and increased confidence in Boeing after years of restrictions. Last month, the agency said it would allow Boeing to again sign off on some of its aircraft itself before they’re handed over to customers, instead of that responsibility falling solely with the FAA.
The Max program was crippled following two crashes of the planes in 2018 and 2019, which killed all 346 people on the two flights. The aircraft was grounded for nearly two years. Covid also hurt production, followed by supply chain problems and, last year, a labor strike at Boeing’s main factories in the Seattle area.
Boeing hasn’t posted an annual profit since 2018. But it has increased output, and its deliveries of new planes are on track to hit the highest rate since that year.
Boeing is scheduled to release quarterly results on Oct. 29.
— CNBC’s Phil LeBeau and Meghan Reeder contributed to this report. More
The classic 60/40 stock and bond portfolio has faced greater scrutiny in recent years with a breakdown in the way fixed-income performed historically as a stock market hedge for investors.
Inflation and government debt concerns are among recent factors driving demand for precious metals including gold and silver, and cryptocurrencies including bitcoin, to represent a greater share of a diversified portfolio.
The so-called “60-20-20” portfolio concept recommends investors consider moving half of the classic bond allocation to an alternative like gold or bitcoin.
The traditional 60/40 portfolio has been under attack for years, and the recent hot trades in precious metals and cryptocurrencies are leading it to lose a little more of its prominence. Multiple strategists and investors are pivoting toward a 60/20/20 market portfolio: with the 60% in stocks unchanged, but fixed income losing half of its former hold over investor money, and 20% carved out for alternatives like gold and bitcoin.
Stocks and bonds are moving in the same direction too often, they say, while inflation, geopolitical risk, and government spending and high debt loads mean bonds no longer offer the protection they once did. “We are seeing greater adoption of non-equity, non fixed-income products,” Todd Rosenbluth, head of research at VettaFi, told CNBC.
In this new approach to structuring market exposure, gold is not a hedge on the margins of a portfolio, but one of its core holdings. Gold recently reached a record high above $4,300. Gold is up over 60% since the beginning of the year, which is backed by central bank demand, de-dollarization, and geopolitical tensions, and what has been called “the debasement trade.”
“What’s really happening now is a shift into the acceptance of gold,” Steve Schoffstall, director of ETF product management at precious metals and critical materials investing company Sprott, said on CNBC’s “ETF Edge” earlier this week. Typically, he said, it’s been viewed as a “fringe” allocation tool, “but what we’re really staring to see now is more prominent economists suggest shifting from 60-40 to something closer to 60-20-20,” he added.
But Schoffstall also said that for “most people, we feel they are probably well positioned if they have a 5%-15% allocation to physical gold.”
Gold ETFs have skyrocketed in performance and investor appeal, with the SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) up around 11% this month, but the flood of investor assets into gold funds extends back to earlier this year. Gold ETFs posted their largest monthly inflows ever in September, according to the World Gold Council, with close to $11 billion in the month. SPDR Gold Shares took in over $4 billion alone last month, and mid-October, has amassed another $1.3 billion from investors, according to ETFAction.com. Sprott says the total assets moved by investors into gold funds this year has surpassed $38 billion.
Stock chart icon
Performance of the SPDR Gold Shares ETF and iShares Bitcoin Trust in 2025.
Some investors are allocating to cryptocurrency, specifically bitcoin, with a similar 20% approach. Some financial advisors have gone beyond even that level, saying up to 40% in cryptocurrency is defensible as an investing approach.
Bitcoin reached a record high of $126,000 on Oct. 6 and has seen a flood of new money this month, with iShares Bitcoin Trust ETF (IBIT) taking in close to $1 billion in a single day, and over $4 billion at the mid-month October mark.
Rosenbluth said the alternatives bucket is no longer a single bet, but a mix of commodities, crypto, and private credit that are all packaged in ETFs, but investors do need to understand the bets have significant differences. “Gold is more risk off … cryptocurrency is more risk on,” Rosenbluth said.
Silver has also gained more attention among investors, and unlike gold, silver is a play on multiple global economic trends, including industrial demand, electrification, and automation. Prices recently climbed to a record high of $53.59 per ounce and some analysts expect it to trend much higher. “Silver is very vast in its uses about 10,000 uses,” Schoffstall said.
Rosenbluth warns amid the current record run for precious metals and crypto that this should not be about investors chasing the highest return in the short-term. While this has been a period of time when these alternatives increased overall portfolio returns, there’s no guarantee that will always be the case. The primary reason to restructure a portfolio with hedges, Rosenbluth said, is to add levers that operate differently during periods of ups and downs in the stock and bond markets, and that can help to smooth out returns over time.
This week was a good example of how these assets, considered popular hedges, can have very different market dynamics. After hitting its record above $126,000 earlier this month, bitcoin has sold off sharply, with a weekly loss of over 8%, as of Friday morning, while gold and silver have continued to move up and remain on pace for weekly gains. Private credit, meanwhile, which has ballooned in recent years but also sparked fears it might be brewing a bubble, became a major concern of the market over the past week since the surprise bankruptcy of auto parts company First Brands. More
CNBC interviewed nearly a dozen small business owners to get a better understanding of how much tariffs are costing them and the impact the duties are having on their strategy and operations.
Many of the small businesses said they’ve been forced to freeze hiring, pull back growth plans, take on new financing or cut salaries to keep operations afloat.
“It’s to the point now where it could kill us, it could take us down, and I could lose everything. … Being a small business owner isn’t worth it when your country turns on you,” said Jared Hendricks, the CEO of Village Lighting, a small business selling Christmas products.
President Donald Trump listens during a Cabinet meeting at the White House on April 30, 2025 in Washington, DC.
Andrew Harnik | Getty Images
Viresh Varma can’t sleep.
The CEO of AV Universal Corp., a small footwear company that sells through retailers like Macy’s, Nordstrom and DSW, said he needed to take out a $250,000 loan to pay his tariff bill on a container of shoes he imported from India for the holiday shopping season.
Varma didn’t have the cash on hand to pay the duties, which he said used to be around $7,500 for a similar-sized container before President Donald Trump’s new tariffs. But without the financing, he wouldn’t have anything to sell during the holidays.
So the 64-year-old said he was faced with a choice: take on the line of credit— which came with onerous terms like weekly payments and a 32% interest rate — and raise prices to pay it back, or close the business he’s spent the last nine years building. He decided to take out the loan.
“Everybody believes that I’m a fighter, so I’m fighting it,” Varma told CNBC in an interview. “We’ve reduced some salaries. We had planned to hire some people we’re not going to hire anymore. … If things don’t look good, especially after increasing the prices, and we don’t get the sales, then obviously we may lay off some people, as well.”
AV Universal is just one of the many small businesses that are buckling under Trump’s global trade war, struggling to pay the sudden increase in duties and forecast what’s ahead as policy evolves. Businesses of all sizes have raised prices and negotiated with vendors to weather the tariff storm and many larger retailers have so far proven resilient, with minimal impact to their profitability and future growth outlooks. Better-than-expected quarterly reports have led investors to largely shrug off the tariff threat, as the S&P 500 hovers near record highs.
But the higher costs have hit smaller companies harder because they have fewer levers to pull than their larger competitors. Their margins are slimmer, their supply chains less diverse and their negotiating power with vendors dampened by the smaller sizes of their orders.
Small businesses owners interviewed by CNBC said they largely expect to be able to manage higher costs from tariffs by raising prices, but only if it doesn’t cause shoppers to buy less — which most are already starting to see.
Often called the backbone of the U.S. economy, small businesses routinely represent more than 40% of the nation’s GDP and employ nearly half of the American workforce, according to the U.S. Chamber of Commerce.
Trump says his tariffs allow the U.S. to reduce its trade deficits with other nations and encourage domestic manufacturing, but some of the small business owners who spoke to CNBC said that’s happening partially at their expense.
The struggles they’re facing could be a warning sign for the rest of the economy and bigger businesses in 2026, said Kent Smetters, a professor of business economics and public policy at the University of Pennsylvania’s Wharton School.
“The small businesses … they’re kind of like the canary in the coal mine here,” said Smetters, the faculty director of the Penn Wharton Budget Model. “They’re going to get hit first, and then I think you’re going to see more of an impact with some delay on larger businesses.”
Larger retailers have been able to manage higher tariff costs in part because they had the foresight and ability to order extra inventory before the new duties went into effect, said Smetters. At a certain point, that stock will run out and push costs higher, and those companies only have so many low-tariff countries where they can produce goods.
The fate of many of Trump’s tariffs is unclear after a federal court ruled them illegal, prompting an appeal from the White House that the Supreme Court is now reviewing. The nation’s highest court, which includes three Trump appointees and has a 6-3 conservative majority, agreed to hear the appeal on a faster-than-normal timeline with arguments scheduled for the first week of November. It’s unclear how fast the justices will issue a ruling, and the tariffs remain in effect during the appeal.
CNBC spoke with around a dozen business owners to better understand how tariffs are affecting them. Here’s how much the duties are costing some of those companies — and what the businesses are doing to offset them.
AV Universal Corp.
Total tariffs paid in 2024: $45,000
Total tariffs expected in 2025: $353,125
Employees: 10
Supply chain: India 80%, Vietnam 15%, Europe 5%
Varma, AV’s CEO, spent much of his career in corporate America before deciding to get into the footwear business about a decade ago. He built three brands from scratch that are now sold online by Amazon, Macy’s, DSW, Nordstrom and other retailers. Varma was in the process of sending orders for the 2025 holiday season — which typically accounts for about 40% of AV’s annual revenue — when Trump announced tariffs on dozens of trading partners on April 2.
Thinking the president was bluffing, Varma placed an order for 20,000 pairs of shoes from his manufacturer in India, but ultimately only shipped half because he couldn’t line up the financing necessary to pay the expected tariff bill on the entire order. Varma expects holiday sales to drop about 30% because he’ll have less inventory to sell, but that decline could get worse if consumers balk at the higher prices he implemented. Since he increased prices earlier this year, sales fell about 30% in August and September.
Varma has searched across the globe to escape the Trump administration’s 50% tariff on Indian goods and is now considering moving his manufacturing to China, as long as Trump walks back his latest threat to raise tariffs on Chinese imports to 100%.
Talus Products
Total tariffs paid in 2024: ~$223,000*
Total tariffs expected in 2025: ~$499,000*
Employees: 9
Supply chain: primarily China
*The figures are adjusted for order volume
Talus Products co-founder and CEO David McClees (middle left) pictured with his team during the holidays.
David McClees, co-founder and CEO of Talus Products, opened his business 38 years ago with a single product: an inflatable travel pillow. The company has since expanded into a range of items, including car organizers and other travel accessories, that it distributes through retailers like The Container Store, Amazon and airport gift shops.
McClees said he’s not worried about having to shut down operations, but said he expects tariffs to put a “severe crimp” in his annual profitability. The company raised prices on certain products to offset tariffs, but is waiting until January to hike again, partially over concerns it could dampen consumer demand during the holiday shopping season. Sales on Amazon, which account for more than half of Talus’ revenue, have already been “soft” in recent weeks, he said.
“We’re nervous,” said McClees. “We don’t typically offer huge discounts on Prime Day, but we do see a bump from their increased traffic, and that was smaller than what we would normally see. It seems like buyers are being very cautious.”
McClees attempted to move some of Talus’ production to Mexico and Vietnam, but said he ultimately decided it was too expensive.
Village Lighting
Total tariffs paid in 2024: less than $50,000
Total tariffs expected in 2025: at least $1 million
Employees: between 11 and 17, depending on season
Supply chain: 50% spread across Vietnam, Cambodia, Indonesia, Myanmar and Thailand, the other 50% in China
Village Lighting CEO Jared Hendricks (center, pictured in white) with his wife, children and son-in-law.
Jared Hendricks, founder and CEO of Village Lighting, started his business 20 years ago making Christmas lighting and decorations before expanding into holiday storage, selling directly to consumers via his website and through big-box stores like Walmart and Target. Since his business is centered around the holidays, his buying and cash flow needs are unique compared with others in the retail industry.
Every year, just before Christmas, he said he uses a $2 million line of credit he took out against his home to buy the inventory he needs for the following year’s holiday and then uses that eventual revenue to pay back the debt. This year, he had to use that line of credit to pay his tariff bill.
“Hopefully I can turn around and mark things up enough for people to buy them from me so I can pay back my tariff debt,” said Hendricks. “It’s to the point now where it could kill us, it could take us down, and I could lose everything. I can’t afford to not bring stuff in because I’ll have nothing to sell. So that’s a game over scenario.”
Because of Village Lighting’s unique buying schedule, the company had to take a loss on about 40% of its annual sales because the orders and pricing were already contractually agreed upon when many of the new duties went into effect. Hendricks said he hopes to make it up by raising prices on his website and wholesale customers. Sales so far this season have been down between 8% and 10% and he owes millions of dollars to his suppliers, who have agreed to accept late payments. Hendricks said the situation has created massive stress for him and his wife, adding that the challenges the Covid-19 pandemic posed to his business feel like “a piece of cake” compared with now.
“I call them my demons. They’re my two or three o’clock in the morning demons, where they just wake me up in a panic, like, ‘how am I going to pay for this? Or how am I going to make this work? What have I done? Should I have quit last April and just cashed in?'” said Hendricks. “Being a small business owner isn’t worth it when your country turns on you.”
Picnic Time
Total tariffs paid in 2024: $950,000
Total tariffs expected in 2025: $2.25 million
Employees: 75
Supply chain: 85%-90% in China, the remainder in India
Picnic Time CEO Paul Cosaro, shown in a gray shirt, with his family outside of the company’s headquarters.
Paul Cosaro’s family business, Picnic Time, was started 43 years ago by his father, an Italian immigrant on a mission to sell high-quality picnic baskets. The company now sells a wide range of products, from coolers to beach chairs, to major retailers like Kohl’s, Target and Macy’s. Since Trump’s new tariffs went into effect, Picnic Time had to freeze hiring and capital expenditures, limiting its ability to produce and release new products, Cosaro said.
“It absolutely has stifled innovation,” he said. “You don’t want to take risks anymore … there’s no room for error.”
Cosaro said he attempted to move his supply chain to other countries during Trump’s first term, hiring additional staff and conducting sourcing missions in India and Mexico. But years later, he was only able to move about 10% of production. He said he raised his prices earlier this year to account for the new tariffs and the third quarter has so far been “very, very, very soft.” Sales are down about 20% and key retailers have pulled back on orders. The holiday season is always important to Picnic Time, as it accounts for about 35% of annual revenue, but this year it feels like the company is putting “all of our eggs in one basket,” said Cosaro.
“For us, it’s critically important,” he said. “We’re literally going to be waiting until the last day of the year to find out if this is going to be a profitable year or not.” For now, Cosaro said he will keep his supply chain primarily in China. He’s considered moving some of it to the U.S., but said he doesn’t have the budget available to take the risk.
Citibin
Total tariffs paid in 2024: $67,883
Total tariffs expected in 2025: $380,000
Employees: 8
Supply chain: 90% Vietnam, 5% China, 5% U.S.
Frank Picarazzi, the chief operating officer of Citibin (left) with his wife Liz Picarazzi, the company’s founder and CEO (right).
Courtesy: Frank Picarazzi
When Liz Picarazzi first started Citibin, which makes rat-proof trash enclosures for cities, parks and homes, the company manufactured in the U.S. After a few years, she said she found U.S. producers couldn’t meet her expectations on price, quality or lead time. She moved production to China and for several years, the business enjoyed manageable tariffs and reliable partners. However, in the lead-up to the 2024 election, she and her husband Frank Picarazzi, Citibin’s COO, started looking for other options over concerns that either candidate would raise tariff rates.
“I told Frank two days after the election, ‘we’re going to Vietnam, like, as soon as we can,'” Liz Picarazzi said.
The couple spent the next few months moving most of their production to Vietnam, only to learn of Trump’s decision to raise tariffs on all aluminum and steel imports to 50%. That raised costs for just about every product Citibin sells. Though her supply chain is now more diversified, Liz Picarazzi said that moving to Vietnam was “somewhat pointless” as a result.
Meanwhile, she said higher costs are affecting talent retention, research and development, and revenue. The company has added a 15% tariff surcharge to products to offset the cost of tariffs. Frank Picarazzi said it has contributed to a 25% decline in sales to homeowners, which the company expects will account for about 50% of overall revenue this year.
Reekon Tools
Total tariffs paid in 2024: $65,000
Total tariffs expected in 2025: more than $400,000
Employees: 20
Supply chain: Malaysia, Thailand, Vietnam and China
Christian Reed, founder and CEO of Reekon Tools, on a job site holding the T1R Hybrid Laser Tape Measure
Research and development is critical for Christian Reed’s tool startup Reekon. He said the company had to cut back R&D spending by 20% because of tariffs.
“This certainly put a thorn in the side of our hiring plan for the rest of the year around engineers for R&D activities,” said Reed. “That’s something that will continue to have to either be paused or completely canceled if nothing changes.”
The hundreds of thousands of dollars Reed planned to use to hire between three and five designers and engineers is now going to tariffs instead, he said. The company, which makes innovative products like digital tape measures for tradespeople, needs to ensure every tool it produces is effective and able to withstand tough conditions on worksites.
“There’s a unique combination of making a product that you can feed up, throw on the concrete, you know, slam around and not break, and at the same time add this digital aspect,” said Reed. “So that puts a very high burden on the testing, the research we have to do … it’s a very costly product as most of the products we’re making are new to [the] world.”
Reed said he’s avoided raising prices on most items, choosing to take the hit to profit margins, but recently increased the price of a new tool – a smaller version of its digital tape measure. Initially, Reekon wanted to price it at $99 and while the margins would’ve been slim, the company expected to be able to make it up in volume, Reed said. However, after tariff rates rose, the company priced it at $119 when it launched in September to help it offset losses in other parts of the business. While the product has been well received, sales so far have fallen short of the company’s projections. More
