Los Gatos business owner Sara Fung said she would have kept her home furnishing store open for its 25th anniversary if it weren’t for President Donald Trump’s tariffs.
She has owned Cotton Works on Santa Cruz Avenue for the last 24-1/2 years. She said she noticed an increase in costs in April after “Liberation Day” tariffs were announced by Trump.
After a 90-day hold was issued for negotiations, she and other business owners chose to wait and see before taking action. But combined factors of increased prices from tariffs and inflation have driven her to close her shop, six months shy of her 25th year as owner.
Cotton Works owner Sara Fung in her store on Wednesday, Sept. 24, 2025, in Los Gatos, Calif. Tariffs have led to Fung’s decision to close her store and retire earlier then she had planned. (Aric Crabb/Bay Area News Group)
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“It’s just hard to have a price so high, and I don’t see the economy’s going anywhere except going down,” Fung said. “And also inflation: People are cutting back and very worried about spending. How I’m seeing it, we can’t plan because we don’t know what these tariffs are going to be.”
Alan Sykes, a Stanford University law professor and senior fellow at the Stanford Institute for Economic Policy Research, said via email that for the most part, the tariffs are aimed at reducing the trade deficit and expanding U.S. manufacturing.
Other tariffs, like those on steel and aluminum, are aimed at national security, despite the fact that the U.S. produces more steel and aluminum domestically than is consumed by the defense industry, he said. Sykes also reasoned that some tariffs on China, Canada and Mexico are aimed at getting them to curtail fentanyl use.
The tariffs, however, have hit hard in a town that prides itself on its support of local businesses. Fung said the costs for a line of outdoor furniture she sells, which is imported from France, went up three times due to tariffs on aluminum and steel. According to the Atlantic Council’s Trump Tariff Tracker, French imports are taxed at a rate of 15%.
Other Los Gatos business owners talked about what products have been hit by higher prices and what they’ve done to try to stay afloat.
Domus owner Margaret Smith places a spatula onto a display rack in her store on Wednesday, Sept. 24, 2025, in Los Gatos, Calif. Most items in the houseware store have been increased due to tariffs. (Aric Crabb/Bay Area News Group)
Domus Gift Shop owner Margaret Smith said many of her products are imported, like linens from India and salad bowls from Brazil – both of which have tariff rates of 50%. Smith said her main priorities are making sure shelves are stocked with enough product and that she can absorb the increased cost to provide them. However, she said she still has to raise prices.
“What happens in these cases with tariffs is the companies who import it have to pay that tax, and then they pass it on to me, and then I’m passing it on to my customers,” Smith said.
Sunny Choi, manager of Danbi Korean Restaurant, said items imported from Korea and China – like soju, gochugaru, container boxes and even frozen vegetables – are more expensive because of tariffs and will “definitely affect our cost basis going forward.” China’s tariff rate is listed as 30%, while South Korea’s rate is 15%, according to Atlantic Council.
Choi worried about how effects from the tariffs could trickle down to those she employs. With increased costs impacting profit margins, Choi said she would likely need to raise prices to make ends meet. Customers could then be turned off to dining out and possibly switch to ordering through take-out, which could put her servers out of work.
“This actually trickles down, so it’s like a butterfly effect,” Choi said. “It trickles down to everything.”
Tariffs have also impacted luxury business owners like Babak Falasiri, owner of Serapi Rug Gallery. The store sells handmade rugs imported from India, Nepal, Afghanistan, Pakistan, Turkey and previously Iran for a few thousand dollars.
A worker moves rugs displayed at Serapi Rug Gallery on Wednesday, Sept. 24, 2025, in Los Gatos, Calif. (Aric Crabb/Bay Area News Group)
Falasiri said if the goal of the tariffs is to move production to the U.S., his business model would suffer. The cost to pay a weaver in a foreign country is much cheaper than the cost of labor in the United States, and the cost of an 8-foot-by-10-foot rug can already range from at least $2,500 to up to $6,500. Falasiri said that, with the markups on imports from India, he’s essentially paying 90% of the cost of the rug.
“Even for a few hundred dollars, for the customers, it’s difficult to justify,” Falasiri said. “We’re paying for the shipping, we’re doing all this, but still, even if you’re bending backwards, sometimes it’s still difficult.”
Falasiri said his business is trying to absorb increased costs as best as possible, but he acknowledged it may cause reduced profit margins in an area where the cost of living is already very high.
“We want to make sure it’s going to be the customer that’s happy in the long run, but for us to be able to leave our doors open, it is a business, we have to make sure we can survive,” Falasiri said.
To help businesses through this time, Los Gatos Chamber of Commerce Executive Director Jennifer Lin said that she and Chamber staff were planning an hourlong workshop in November to explain the various provisions of Trump’s “Big Beautiful Bill” passed by the Republican-controlled Congress and how it may impact businesses. She said the Chamber has been monitoring tax and tariff news in their weekly newsletter.
However, others, like Choi, said they might protest or boycott the tariffs.
Sykes advocated for people who are unhappy with the tariffs to elect people in Congress and White House who believe in open trade. He said few Democratic and Republican politicians openly do so anymore. He noted the U.S. Supreme Court could declare many of the tariffs illegal in a case they will hear in November.