The line of credit was supposed to be temporary. Kacie Wright remembers the conversation with her banker last spring, both of them betting the tariff shock would ease within weeks. Now, nearly a year later, Houghton Horns—a family-owned musical instrument shop in Keller, just outside Fort Worth—is still servicing debt it took on just to clear customs. Wright, the store’s business manager, watches online sales sink while interest payments climb. The refund the Supreme Court ordered hasn’t arrived, and nobody at Treasury will say when it might.
Thursday marks one year since President Donald Trump declared what he called “Liberation Day,” rolling out sweeping tariffs on nearly every U.S. trading partner through executive order. The Supreme Court later ruled those levies illegal, imposed under emergency powers never intended for trade wars. Yet the administration has not issued refunds, and new rounds of tariffs continue to roll out under separate legal authorities. Small businesses across Texas are now caught in a policy limbo that has drained cash reserves, killed expansion plans, and forced layoffs in sectors from retail to manufacturing.
Texas companies paid $13 billion in tariffs over an 11-month stretch ending in January, according to data collected under the International Emergency Economic Powers Act. But that figure tells only part of the story. The advocacy group We Pay the Tariffs calculates the actual burden at $26 billion when including all White House-imposed duties between March 2025 and January of this year. New trade data from the U.S. Census Bureau, due out Thursday, is expected to push that total even higher. For context, that’s more than the entire annual budget of the Texas Department of Transportation.
Dan Anthony, executive director of We Pay the Tariffs, says the harm goes deeper than dollar totals. “One year after Liberation Day, the damage to America’s small businesses goes far beyond what any tariff data can capture,” he told reporters this week. “These businesses have spent the last 12 months not growing, not hiring, not innovating, but surviving. They’ve drained savings, taken on debt, laid off employees and cut product lines just to keep their doors open.” His organization represents more than 4,000 small importers nationwide, many of them in border states like Texas where trade flows are woven into the economic fabric.
The ripple effects are now showing up in regional economic indicators. A study published late last year by the Federal Reserve Bank of Dallas found that tariff-related costs have subtracted roughly 0.7 percentage points from Texas GDP growth, with disproportionate impacts on counties tied to cross-border commerce. Employment in wholesale trade sectors has stagnated, and business loan delinquencies in retail have ticked upward for three consecutive quarters. The Fed analysis noted that while large corporations can absorb temporary shocks through hedging and diversified supply chains, small firms lack those buffers.
Wright’s experience at Houghton Horns illustrates the mechanics of that squeeze. Online sales have dropped 40 percent since last spring, even as foot traffic in the physical store holds steady. The reason is price. To cover tariff costs on imported brass instruments—most of which come from Germany, China, and India—the store had to raise retail prices by an average of 22 percent. Customers comparison-shop online, see cheaper listings from competitors still selling pre-tariff inventory, and click away. “Even if we get refunded, because we’ve had to raise our prices so high to cover these tariffs, that refund won’t cover the lost revenue,” Wright explained. The math is unforgiving: a $1,200 trumpet now listed at $1,464 doesn’t compete well against a rival’s $1,250 clearance model, refund or not.
But the price hikes are only half the problem. U.S. Customs and Border Protection requires importers to pay duties upfront before releasing goods. For a small shop ordering a container of French horns and trombones, that means coming up with tens of thousands of dollars in cash before a single instrument reaches the sales floor. Wright’s store, like many others, turned to bank financing. “We’ve had to get a line of credit from our bank and take out loans to pay up front,” she said. “And so, we’ve been paying interest on loans, so even if we do get paid back for what we’ve already paid, we eat the tariffs.” Over the past year, Houghton Horns has paid roughly $18,000 in interest on tariff-related borrowing, money that would have otherwise funded a second employee or a marketing push.
The timing of inventory depletion creates another twist. Large retailers with deeper pockets stockpiled goods before tariffs hit, allowing them to delay price increases for months. That gave chains like Guitar Center and Sweetwater a temporary competitive edge. Now, as that pre-tariff inventory runs dry, the price gap is closing. “If the tariffs continue for another year, you’re just going to see prices everywhere just slowly creep up as people run out of last year’s inventory and start having to import more,” Wright predicted. “So, we really need the tariffs to stop now, or prices are just going to get worse.” The delayed pass-through means inflation from trade policy is still working its way into consumer prices, a phenomenon economists call the “bullwhip effect.”
The uncertainty is arguably worse than the costs themselves. Business owners across Texas describe a paralysis in planning. A Dallas-based importer of industrial fasteners told We Pay the Tariffs he has postponed hiring two warehouse workers because he cannot predict cash flow six months out. A Houston toy retailer scrapped plans to open a second location, citing the impossibility of forecasting margins when tariff rates shift monthly. A San Antonio electronics distributor has begun refusing orders over $50,000, unwilling to tie up capital in customs limbo. These are not dramatic failures or closures, but a slow erosion of economic dynamism that shows up only in aggregate data years later.
The legal picture remains murky. While the Supreme Court ruled the initial IEEPA tariffs unconstitutional, the administration has pivoted to invoking Section 232 national security provisions and Section 301 unfair trade practice authorities to impose new levies. Trade lawyers say those legal bases are more defensible, meaning refunds may never materialize for newer tariffs even if older ones are eventually reimbursed. The U.S. Department of the Treasury has not responded to repeated requests for comment on refund timelines or the broader business impacts. Customs and Border Protection referred questions to Treasury. The White House Office of Management and Budget did not return calls.
Meanwhile, the political calendar grinds on. Midterm elections loom, and tariff policy has become a flashpoint in swing districts across Texas. Small business owners, traditionally a Republican-leaning constituency, are voicing frustration in town halls and local chambers of commerce. But neither party has proposed a clear legislative fix, and the bureaucratic machinery for processing refunds—assuming they are ordered—could take years to disburse funds. Wright isn’t optimistic. “Honestly, I think we’re just going to have to adapt and hope we survive long enough to see the other side of this,” she said. For now, that means smaller orders, fewer product lines, and watching competitors close one by one.
