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Frontier Online

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Frontier Online

News and advice from our small-business Web siteCasualties of War

Small importers are getting crunched in a trade war between the U.S. and the European Union.

For the past 18 months, the U.S. has slapped 100% tariffs on a changing list of so-called luxury goods that now includes canned fruit juices, batteries, linens, bath salts, chicory, some meats and cheeses, and Louis Vuitton handbags. The tariffs, meant to punish the EU for its restrictions on beef and banana imports, are walloping small companies that import items on the list.

Last spring, the tariffs forced Rick Reinert to close his Reha Enterprises Ltd., an importer of European bath salts. He says he paid $52,000 in levies before giving up. Andi Christian, an importer of Kneipp Herbal Bath products, says the trade battle has cost her "$137,000, minimum."Not-So-Easy Money

If your friendly banker doesn't seem quite so friendly these days, it's not your imagination. Over the past three months, banks have tightened the screws.

The Federal Reserve's third-quarter survey of senior loan officers at 56 domestic and 22 foreign banks found that more than a third had made loan requirements "somewhat" more stringent. About 24% had tightened their standards on loans to small companies, and for the third quarter in a row, not a single bank reported that it had eased its standards. In fact, fully a third of U.S. banks said they hiked premiums on loans to small companies that they considered risky. One-third of the banks surveyed said they were increasing the spread, or the difference between the loan rates they charge and what they pay for funds. Forty-one percent of the banks also said they were raising the cost of credit lines.For the full stories, click Online Extras at frontier.businessweek.comEdited by Kimberly Weisul

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