The impact of tariffs and small business valuations in 2026 has become one of the most urgent topics for business owners considering a sale, merger, or acquisition. At CGK Business Sales, we have watched a year of dramatic tariff reversals create both anxiety and opportunity in the lower and middle market. From the Supreme Court’s landmark ruling striking down universal tariffs to the administration’s swift pivot to Section 122 duties, the whiplash has left many small and medium-sized business owners wondering what their companies are actually worth right now — and whether this is the right time to act.
The Tariff Timeline That Changed Everything
To understand where we are today, it helps to trace how fast the landscape has shifted. Through much of 2025 and into early 2026, sweeping tariffs imposed under the International Emergency Economic Powers Act pushed import costs sharply higher across virtually every sector. According to the Tax Foundation, those tariffs raised more than $160 billion before the courts intervened.
Then came the February 20, 2026 Supreme Court decision in Learning Resources, Inc. v. Trump. In a 6-3 ruling, the Court declared that IEEPA does not authorize the president to impose tariffs, immediately invalidating the universal tariff framework. More than 330,000 importers — from small family-owned businesses to large corporations — became eligible for duty drawbacks on nearly 53 million import entries.
The relief was short-lived. Within days, the administration announced a new 10 percent global tariff under Section 122 of the Trade Act of 1974, a provision that allows temporary import surcharges for up to 150 days. Those duties took effect on February 24, 2026 and are set to expire on July 23, 2026 — unless Congress extends them.
What This Means for Small Business Valuations
For owners of small and medium-sized businesses, this tariff whiplash has created a valuation environment unlike anything we have seen in recent memory. At CGK Business Sales, we are seeing several direct effects on how businesses are being priced.
Margin Compression and Earnings Uncertainty
The most immediate impact is on profitability. A survey by the Main Street Alliance found that 81.5 percent of small businesses raised or considered raising prices in response to tariffs, while 41.7 percent delayed or considered delaying expansion. Nearly one-third anticipated layoffs. When a buyer is evaluating a company’s trailing twelve months of earnings, that kind of volatility makes it harder to establish a reliable baseline. Buyers are increasingly asking whether current margins reflect the real earning power of the business or a temporary distortion caused by tariff exposure.
Supply Chain Due Diligence Is Now a Dealbreaker
Acquisition due diligence has changed. Buyers and their advisors now scrutinize a target company’s supply chain exposure to tariffs far more aggressively than they did even a year ago. Businesses that depend heavily on imported raw materials, components, or finished goods face harder questions about how adaptable their sourcing is. Those that have already diversified suppliers or shifted to domestic sourcing are in a stronger negotiating position. Companies that have not may face a tariff risk discount in their business valuation — or see buyers push for earn-out structures tied to future profitability.
The Refund Effect
There is a silver lining for some businesses. The $166 billion in tariff refunds flowing back to importers represents a significant liquidity event. Companies that paid elevated duties over the past year are now recovering those costs, which can temporarily boost cash positions and, by extension, valuations. For businesses considering a sale, this creates a narrow window where financials may look stronger than usual. At CGK Business Sales, we encourage owners who fall into this category to explore their options with a business broker sooner rather than later, before that refund effect fades from the books.
How Tariff Whiplash Is Affecting Buyer Behavior
The uncertainty is not just affecting sellers. Buyers in the small and medium-sized business market are recalibrating how they approach deals in this environment.
Strategic Acquisitions Are Surging
Paradoxically, tariff disruption is driving more M&A activity, not less. Data from early 2026 shows that deal values for transactions of $100 million and above surged 224 percent, while billion-dollar-plus deals jumped 319 percent. At the lower end of the market, we at CGK Business Sales are seeing a similar trend. Buyers — particularly those backed by private equity or seeking vertical integration — view this as a moment to acquire businesses that can strengthen their supply chains or reduce their tariff exposure through domestic operations.
Buyer Caution on Tariff-Dependent Models
At the same time, buyers are more cautious about businesses whose profitability hinges on cheap imports. If a company’s competitive advantage is built on low-cost overseas sourcing that could be disrupted by the next round of tariffs, buyers are pricing that risk into their offers. We are advising clients to prepare detailed documentation showing how their business would perform under various tariff scenarios — a 10 percent duty, a 15 percent duty, or even a return to the higher IEEPA-era rates.
The 150-Day Clock
The temporary nature of the Section 122 tariffs adds another layer of complexity. With the current duties set to expire on July 23, 2026, both buyers and sellers are trying to read the tea leaves. Will Congress extend them? Will new tariff mechanisms replace them? This uncertainty is compressing deal timelines. Some buyers want to close before the expiration date so they can lock in current pricing assumptions, while others are content to wait and see what the post-July landscape looks like.
Positioning Your Business in a Tariff-Uncertain Market
If you own a small or medium-sized business and are thinking about selling a business in this environment, there are several steps we at CGK Business Sales recommend.
First, get a current valuation that accounts for tariff impacts. A valuation performed even six months ago may not reflect today’s reality. Your financials need to tell a clear story about which earnings are sustainable and which are artifacts of tariff disruption or refund windfalls.
Second, document your supply chain resilience. Buyers want to see that you have thought through tariff scenarios and have contingency plans. If you have already diversified suppliers, renegotiated contracts, or absorbed cost increases without losing customers, that story adds real value to your asking price.
Third, move with purpose. The combination of refund-boosted balance sheets, surging M&A activity, and a temporary tariff window creates a favorable environment for sellers — but it will not last indefinitely. The businesses that come to market prepared, with clean financials and a clear narrative, are the ones that will command the strongest multiples.
Industries Feeling the Impact Most
Not all small businesses are affected equally by tariff whiplash. At CGK Business Sales, we are seeing the greatest valuation impact in manufacturing businesses that rely on imported steel, aluminum, or electronic components. Distributors and wholesalers who serve as intermediaries between foreign suppliers and domestic retailers are also facing harder questions from prospective buyers.
Restaurants and food service businesses that source specialty ingredients internationally have seen input costs fluctuate wildly, making it difficult to project forward earnings with confidence. Conversely, service-based businesses with minimal supply chain exposure — such as professional services firms, healthcare practices, and technology companies with domestically hosted infrastructure — are weathering the tariff storm with relatively stable valuations.
Retail businesses present a mixed picture. Those that built their models around imported consumer goods have been forced to raise prices, and some have lost market share to competitors with domestic supply chains. On the other hand, retailers who pivoted quickly to source domestically or who carry products with strong brand loyalty have actually strengthened their competitive positions.
Understanding where your business falls on this spectrum is essential when preparing for a sale. Buyers are sophisticated enough to distinguish between businesses with genuine tariff resilience and those that have simply gotten lucky with timing.
The Bottom Line
The story of tariffs and small business valuations in 2026 is ultimately a story about uncertainty — and about the businesses that learn to navigate it. The Supreme Court’s ruling created a seismic shift, the Section 122 pivot introduced new questions, and the expiration clock is ticking. For small and medium-sized business owners, the window of opportunity is real, but it requires action and preparation.
At CGK Business Sales, we help business owners understand exactly where they stand in this shifting landscape. Whether you are ready to sell, exploring your options, or simply want to know what your business is worth in today’s market, we are here to guide you through it.
