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Five important lessons learned from the Trump-Netanyahu summit in Florida | Updates on Israel-Palestine conflict

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Israeli Prime Minister Benjamin Netanyahu and US President Donald Trump have presented a united front and heaped praise on each other as they held another meeting to discuss the tensions in the Middle East.

On Monday, Netanyahu paid his fifth visit to the United States since Trump’s inauguration in January, meeting the president at his Mar-a-Lago resort in Florida.

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Their mutual flattery turned into geopolitical alignment as the two leaders addressed the most pressing issues in the Middle East: Gaza and Iran.

Trump claimed that Israel is helping the people of Gaza and dismissed the near-daily Israeli ceasefire violations.

Here are the key takeaways from Monday’s meeting.

Trump stresses Hamas must disarm

Before and after his meeting with Netanyahu, Trump stressed that Hamas must disarm, issuing a stern threat to the Palestinian group.

Asked what would happen if Hamas refused to give up its weapons, Trump said: “It would be horrible for them, horrible. It’s going to be really, really bad for them.”

Last week, US Secretary of State Marco Rubio said that Washington’s top priority was to move to the second phase of the ceasefire, which would see the establishment of a technocratic Palestinian administration and the deployment of an international police force.

But on Monday, Trump kept the focus on Hamas, reiterating the claim that other countries have offered to “wipe them out” if the group refuses to give up its weapons.

Israel has killed 414 Palestinians in Gaza since the start of the ceasefire in October, and it continues to restrict the flow of international aid into the territory, including temporary shelter provisions, despite people suffering deadly weather conditions in makeshift tents.

Trump, however, said that Israel is fully living up to its commitments under the deal – “100 percent”.

“I’m not concerned about anything that Israel is doing,” he told reporters.

US threatens Iran

Trump suggested that Washington would carry out further military action against Iran if Tehran rebuilds its nuclear programme or missile capacity.

The president kept returning to the oft-cited argument that the US air strikes against Iranian nuclear facilities in June are what paved the way for the ceasefire in Gaza.

“Now I hear that Iran is trying to build up again, and if they are, we’re going to have to knock them down,” Trump said.

“We’ll knock them down. We’ll knock the hell out of them. But, hopefully, that’s not happening.”

In recent weeks, Israeli officials and their US allies have shifted the focus to Iran’s missile programme, arguing it should be dealt with before it poses a threat to Israel.

When asked whether the US would back an Israeli attack targeting Iran’s missile programme, Trump said, “If they will continue with the missiles, yes. The nuclear? Fast. OK? One will be: Yes, absolutely. The other is: We’ll do it immediately.”

Iran has ruled out negotiating over its missile programme, and it has denied seeking to build a nuclear weapon.

Israel, meanwhile, is widely believed to have an undeclared nuclear arsenal.

Bromance festival

Since the early days of Israel’s genocidal war on Gaza, US media reports have suggested that the US president, first Joe Biden, then Trump, was angry or frustrated at Netanyahu.

But the US military and diplomatic support for Israel has never been interrupted.

Ahead of Netanyahu’s visit, similar reports emerged about a potential rift between him and Trump.

Nonetheless, the two leaders put on a show of brotherly romance on Monday.

Trump called Netanyahu a “hero”, stressing that Israel may not have existed without his wartime leadership.

“We’re with you, and we’ll continue to be with you, and a lot of good things are happening in the Middle East,” Trump told Netanyahu.

“We have peace in the Middle East, and we’re going to try and keep it that way. I think we will be very successful in keeping it that way. And you’ve been a great friend.”

The US president also highlighted his efforts to secure a presidential pardon for Netanyahu, who is facing corruption charges in Israel.

The Israeli prime minister announced that the US president will be awarded the Israel Prize, which is normally given to Israeli citizens.

“I have to say that this reflects the overwhelming sentiment of Israelis across the spectrum,” Netanyahu said.

“They appreciate what you’ve done to help Israel, and to help our common battle against the terrorists and those who would destroy our civilisation.”

Netanyahu has notably not been pardoned.

Trump calls for Israel-Syria rapprochement

One area where Trump appeared to press Netanyahu was Syria.

Trump said Netanyahu is “going to get along” with Syria, lauding Syrian President Ahmed al-Sharaa.

Since the fall of former President Bashar al-Assad last year, Israel has expanded its occupation of southern Syria beyond the Golan Heights, seizing large areas in Jabal al-Sheikh. The Israeli military has also been carrying out raids, reportedly abducting and disappearing people in the country.

The new Syrian authorities have stressed that they do not seek conflict with Israel, but talks to reach a security agreement between the two countries have stalled.

“We do have an understanding regarding Syria,” Trump said. “Now, with Syria, you have a new president. I respect him. He’s a very strong guy, and that’s what you need in Syria.”

Netanyahu was non-committal on Israel’s approach to Syria.

“Our interest is to have a peaceful border with Syria,” he said. “We want to make sure that the border area right next to our border is safe — we don’t have terrorists, we don’t have attacks.”

On renewed war in Lebanon: ‘We’ll see about it.’

Since the start of the truce in Gaza, Israel has intensified its attacks in Lebanon, leading to fears that it may re-launch its full-scale war against the country.

Earlier this year, the Lebanese government issued a decree to disarm Hezbollah, but the group pledged to hold onto its weapons to defend the country against Israel.

On Monday, Trump did not rule out renewing the conflict in Lebanon.

“We’ll see about it,” the president said when asked whether he would support more Israeli strikes in Lebanon.

“The Lebanese government is at a little bit of a disadvantage, if you think of it, with Hezbollah. But Hezbollah has been behaving badly, so we’ll see what happens.”

Trump hints at possible dismissal of Powell as Federal Reserve chair with looming decision on new pick

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President Donald Trump teased that he has a preferred candidate to be the next chair of the Federal Reserve, but is in no hurry to make an announcement — while also musing that he might fire the central bank’s current leader, Jerome Powell.

“I do, still do — hasn’t changed,” Trump said at a press conference Monday, when asked if he has a favorite candidate. “I’ll announce him at the right time. There’s plenty of time.”

Trump added the Powell should resign and that he’d “love to fire him.”

“Maybe I still might,” Trump told reporters at his Mar-a-Lago resort in Florida.

Trump did not specify who is his leading chair candidate and said an announcement would be made in “January sometime.” 

National Economic Council Director Kevin Hassett has been seen as the frontrunner, though Trump has also expressed interest in former Fed governor Kevin Warsh. Other finalists in the process have included current Fed governors Christopher Waller and Michelle Bowman and BlackRock’s Rick Rieder. 

Earlier: Bessent Sees Room for a Future Revamp of the Fed’s 2% Target

Trump has made numerous cryptic — and sometimes contradictory — remarks about his decision-making process regarding the new central bank chief. The president earlier in December said he’d narrowed the pool of contenders down to one, but subsequently said he was considering multiple candidates and has heaped praise on several of the names on the short list.

Trump has long been a critic of Powell, who he picked to lead the central bank during his first term. The president has indicated he wants the next chair to more aggressively cut interest rates as the White House looks to lower mortgage costs.

He said Monday he was considering a “gross incompetence” lawsuit against Powell related to an ongoing renovation project at the Fed. Powell’s term as chair is set to end in May of 2026, but his term on the Fed’s Board of Governors doesn’t expire until 2028.

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What prompted Israel to acknowledge the independence of the breakaway African state?

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Wedaeli Chibelushi,

Ameyu Etana,BBC Afaan Oromooand

Farah Lamane,BBC Somali

AFP via Getty Images Young men crowd together holding Somaliland flagsAFP via Getty Images

Residents of Somaliland’s capital city, Hargeisa, have been celebrating Israel’s declaration

Israel has taken the controversial decision to recognise the breakaway state of Somaliland as an independent nation, sparking condemnation from many other countries.

China is the latest to condemn the decision, with its foreign ministry spokesperson Lin Jian telling reporters: “No country should encourage or support other countries’ internal separatist forces for its own selfish interests.”

China outlined its position ahead of the UN Security Council holding an emergency session to discuss Israel’s decision.

Israel on Friday became the first country in the world to acknowledge Somaliland as a standalone republic, more than 30 years after the region declared independence from Somalia.

Somaliland’s president called the development “a historic moment”, but Somalia furiously rejected Israel’s move as an attack on its sovereignty.

Dozens of countries and organisations, such as Turkey, Saudi Arabia and the African Union, have also condemned Israel’s surprise declaration.

Why does Somaliland want independence?

A breakaway, semi-desert territory on the coast of the Gulf of Aden, Somaliland declared independence after the overthrow of Somali military dictator Siad Barre in 1991.

The move followed a secessionist struggle during which Siad Barre’s forces pursued rebel guerrillas in the territory. Tens of thousands of people were killed and towns were flattened.

Though not internationally recognised, Somaliland has a working political system, government institutions, a police force, and its own currency.

Its history as a distinct region of Somalia dates back to nineteenth century colonial rule. It was a British protectorate – known as British Somaliland – until it merged with Italian Somaliland in 1960 to form the Somali Republic.

Those in favour of Somaliland’s independence argue that the region is predominantly populated by those from the Isaaq clan – an ethnic difference from the rest of Somalia.

Also, Somaliland, home to roughly six million people, enjoys relative peace and stability. Its proponents argue that it should not be shackled to Somalia, which has long been wracked by Islamist militant attacks.

However, Somalia considers Somaliland to be an integral part of its territory. The government in Somalia’s capital city, Mogadishu, has repeatedly said that any recognition of Somaliland’s independence would contravene Somalia’s sovereignty.

Somali President Hassan Sheikh Mohamud has also characterised Israel’s declaration as an “existential threat” to his country’s unity.

Why did Israel recognise Somaliland as an independent state?

In a phone call with Somaliland President Abdirahman Mohamed Abdullahi on Friday, Israeli Prime Minister Benjamin Netanyahu said his country was acknowledging Somaliland’s “right of self-determination”.

He also said official recognition would be “a great opportunity for expanding” the countries’ partnership.

However analysts say there are strategic reasons for Israel’s declaration.

“Israel requires allies in the Red Sea region for many strategic reasons, among them the possibility of a future campaign against the Houthis,” Israeli think tank the Institute for National Security Studies said, referring to Yemen’s Iran-backed rebels, in a paper last month.

“Somaliland is an ideal candidate for such cooperation as it could offer Israel potential access to an operational area close to the conflict zone.”

Israel repeatedly struck targets in Yemen after the Gaza war broke out in October 2023, in response to Houthi attacks on Israel that the rebels said were in solidarity with Palestinians in the Gaza Strip.

In response to Israel recognising Somaliland, the Houthis warned that any Israeli presence in Somaliland would be considered a “military target” for their forces.

A few months ago, a number of news outlets reported that Israel had contacted Somaliland over the potential resettlement of Palestinians forcibly removed from Gaza.

Israel did not comment on the reports, but at the time, Somaliland said that any move by Israel to recognise its independence would not have anything to do with the Palestinian issue. Both Somalia and the Palestinian Authority have suggested Israel’s recognition of Somaliland could be linked to a plan to displace Palestinians.

“Somalia will never accept the people of Palestine to be forcibly evicted from their rightful land to a faraway place,” Somalia’s president told his parliament on Sunday.

Offering his perspective, US-based Africa analyst Cameron Hudson told the BBC that Israel has recognised Somaliland primarily because it is trying to counter Iran’s influence in the Red Sea region.

“The Red Sea is also a conduit for weapons and fighters to flow up the Red Sea into the Eastern Mediterranean. It has traditionally been a source of support and supply to fighters in Gaza. And so having a presence, having a security presence, having an intelligence presence at the mouth of the Red Sea only serves Israel’s national security interests,” he said.

Why has Israel’s move been condemned so widely?

Israel has been criticised by the likes of Egypt, Turkey, Saudi Arabia, the African Union, Yemen, Sudan, Nigeria, Libya, Iran, Iraq and Qatar.

In their condemnations, many of these countries have referred to Somalia’s “territorial integrity” and the breaching of international principles.

The African Union has long been concerned that recognising Somaliland could set off a chain reaction, where separatists could demand recognition for the territories they claim.

“Regions could attempt to establish external alliances without the consent of central governments, creating a dangerous precedent that risks widespread instability,” Abdurahman Sayed, a UK-based analyst for the Horn of Africa, told the BBC.

Is there any support for Israel’s declaration?

Countries considered to be allies of Somaliland, or sympathetic to its campaign for recognition, have largely remained quiet.

For instance, the United Arab Emirates (UAE), which operates a military port in Somaliland, has not released a statement.

Mr Hudson told the BBC that the UAE is “very much aligned with the Israelis on this question of Somaliland”.

“I think even now today you’re going to see an alignment of Israeli and Emirati interests across the entire Red Sea region,” he added.

Ethiopia’s government has also refrained from commenting. Last year Somaliland agreed to lease part of its coastline to landlocked Ethiopia – a move that angered Somalia.

Mr Abdurahman said Turkey stepped in to mediate between Somalia and Ethiopia. It led Ethiopia to sign an agreement with Somalia’s government, committing to respect its territorial integrity.

“As a result, although Israel’s unilateral recognition of Somaliland may be quietly welcomed by Ethiopia, Addis Ababa appears to have adopted a cautious “wait-and-see” approach,” the analyst added.

Somalilanders had hoped the US would recognise it as an independent state following signals given before Donald Trump began his second term as president.

But in response to Israel’s declaration, Trump suggested to the New York Post that he would not swiftly follow Netanyahu’s lead.

“Does anyone know what Somaliland is, really?,” he reportedly said.

More BBC stories on Somaliland:

Getty Images/BBC A woman looking at her mobile phone and the graphic BBC News AfricaGetty Images/BBC

Challenging the Client

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Deadly Outcome of Police Raid on Suspected ISIS Safe House in Turkey

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new video loaded: Police Raid on Suspected ISIS Safe House in Turkey Turns Deadly

Three police officers and six militants were killed in clashes during a police raid on a suspected Islamic State safe house in Turkey on Monday, the authorities said.

By Monika Cvorak

December 29, 2025

Oil prices rise by more than 2% due to diminished peace prospects in Ukraine and escalating tensions in Yemen.

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Oil settles up over 2% on dented peace hopes in Ukraine, tensions in Yemen

Trump confirms US support for strikes against Iran’s missile program

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Speaking alongside Benjamin Netanyahu, Trump threatens to ‘knock’ down Iran’s attempts to rebuild nuclear capabilities.

United States President Donald Trump suggested that Washington would consider further military action against Iran if Tehran rebuilds its nuclear programme or missile capacity.

Speaking in Florida on Monday, Trump did not rule out a follow-up attack after the June air strikes that damaged three Iranian nuclear facilities.

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“Now I hear that Iran is trying to build up again, and if they are, we’re going to have to knock them down,” Trump told reporters. “We’ll knock them down. We’ll knock the hell out of them. But hopefully that’s not happening.”

Trump issued his threat as he welcomed Israeli Prime Minister Benjamin Netanyahu to his Mar-a-Lago estate in Palm Beach, Florida.

Trump said that the US and Israel have been “extremely victorious” against their enemies, referring to the wars in Gaza and Lebanon, and the strikes against Iran in June.

When asked whether the US would back an Israeli attack against Iran targeting Tehran’s missile programme, Trump said, “If they will continue with the missiles, yes; the nuclear, fast. Okay, one will be yes, absolutely. The other is: We’ll do it immediately.”

Another round of strikes against Iran would likely stir internal opposition in the US, including from segments of Trump’s own base of support.

Trump has repeatedly said that the June strikes “obliterated” Iran’s nuclear programme.

With the nuclear issue address, according to Trump, Israeli officials and their US allies have been drumming up concern about Iran’s missiles.

Tehran fired hundreds of missiles at Israel in June in response to the unprovoked Israeli attack that killed the country’s top generals, several nuclear scientists and hundreds of civilians.

Senator Lindsey Graham, an Iran hawk who is close to Trump, visited Israel this month and repeated the talking points about the dangers of Iran’s long-range missiles, warning that Iran is producing them “in very high numbers”.

“We cannot allow Iran to produce ballistic missiles because they could overwhelm the Iron Dome,” he told The Jerusalem Post, referring to Israel’s air defence system. “It’s a major threat.”

Iran has ruled out negotiating over its missile programme, which is at the core of its defence strategy.

On Monday, Trumps said Iran should “make a deal” with the US.

“If they want to make a deal, that’s much smarter,” Trump said. “You know, they could have made a deal the last time before we went through a big attack on them, and they decided not to make the deal. They wish they made that deal.”

The prospect of returning to war in the Middle East comes weeks after the Trump administration released a National Security Strategy calling for shifting foreign policy resources away from the region and focusing on the Western Hemisphere.

In June, Iran responded to the US strikes with a missile attack against a US base in Qatar, which did not result in American casualties. Trump announced a ceasefire to end the war shortly after the Iranian response.

But advocates warn that another episode of attacking Iran may escalate into a longer, broader war.

Trita Parsi, executive vice president at the Quincy Institute, a US think tank that promotes diplomacy, told Al Jazeera last week that the Iranian response would be “much harsher” if the country is attacked again.

“The Iranians understand that unless they strike back hard and dispel the view that Iran is a country that you can bomb every six months – unless they do that – Iran will become a country that Israel will bomb every six months,” Parsi said.

2025 Swammy Awards: Jack Punswick – Heart of a Champion

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By Terin Frodyma on SwimSwam

See all of our 2025 Swammy Awards here

The challenges an athlete faces in the water are a testament to one’s heart and dedication in and of themselves. But outside of the lane lines is a whole new world of obstacles and hardships to overcome. In the case of Southern Indiana commit Jack Punswick, that obstacle came in the form of a diagnosis of Hodgkin’s Lymphoma in 2024, a battle he would fight into 2025. His overcoming of the cancer earns him the 2025 Swammy for the Heart of a Champion.

Punswick, a lifelong baseball player, was cut from his high school baseball team during his sophomore year, leading him to find a new sport. He found it with swimming, joining his high school team at Overland Park-Blue Valley Southwest High School. After joining the Cool Swim Team and competing for a year, Punswick won the Kansas 6A state title in the 100 breast as a junior, clocking 57.94. He later qualified for both the USA Swimming Futures Championships and Speedo Sectionals.

When traveling to Minneapolis for his first futures meet, Punswick began to feel sick and was later diagnosed with pneumonia. He developed swollen lymph nodes, growing bigger as time went on, and got them checked out just over a week into September. A few days later, Punswick was diagnosed with stage II Hodgkin’s Lymphoma.

The diagnosis did not keep him out of the water. However, despite the pain of swimming, Punswick still managed to get in the water, even after starting chemotherapy in September of 2024, and lasted through late December of that year. He trained multiple times a week, wanting to defend his state title in the 100 breast.

He canceled recruiting trips and decided to take a gap year before going to college, and chose not to race until he had to qualify for the Kansas 6A State Championships earlier this calendar year. His chemotherapy timeline left him less than two months between his final appointment in December 2024 and the state championships in February 2025.

By the time those championships rolled around, Punswick was not yet fully cleared of his cancer, but he managed to finish 2nd in the 100 breast, touching in 59.63, just behind his club teammate, Lincoln Mainelli. Pinswick’s effort to get back in the water earned him the 2025 National High School Spirit of Sport Award, which recognizes individuals who exemplify the spirit of sport.

Punswick’s effort also helped Overland Park-Blue Valley Southwest to their 3rd straight KSHSAA 6A title.

In April, Punswick was announced as cancer-free with clear scans, signaling the end of his battle with cancer.

This past October, Punswick committed to the University of Southern Indiana in the Summit League, just over a year after his diagnosis.

Read the full story on SwimSwam: 2025 Swammy Awards: Heart Of A Champion – Jack Punswick

Light-Based Brain Implant Restores Lost Senses

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For most people, the loss of a sense such as sight is devastating, not only for intensifying vulnerability, but for undermining quality of life. While prostheses can be functionally useful, they can’t replace the sensory information such as texture, moisture, and density that our skin so easily conveys to our brains.

That’s why a first-of-kind optogenetic device from Northwestern University, near Chicago, offers so much hope. Roughly the size of a house key and thinner than a coin, the new wireless neuro-implant may eliminate the need for certain skull-sawing and -drilling surgeries through minimally invasive implantation beneath the scalp. Neuroscientists can apply the soft, flexible “neuro-key” to the surface of the skull where it beams neuron-activating light directly through the cranium into the cerebral cortex, entirely bypassing evolved sensory channels.

 In their forthcoming Nature Neuroscience paper, lead author and postdoctoral fellow Mingzheng Wu and colleagues describe how in experiments with mouse brain models, the neuro-key precisely activated neuron groups that had been modified with a gene from a light-sensitive algae. Mice that could not see, hear, or feel were quickly able to learn to interpret the light signals to complete various tasks.

“Our brains are constantly turning electrical activity into experiences, and this technology gives us a way to tap into that process directly,” said experimental lead Yevgenia Kozorovitskiy, the Irving M. Klotz Professor of Neurobiology in Northwestern’s Weinberg College of Arts and Sciences, and a member of the Chemistry of Life Processes Institute. “This platform lets us create entirely new signals [to] see how the brain learns to use them. It brings us just a little bit closer to restoring lost senses after injuries or disease while offering a window into the basic principles that allow us to perceive the world.”

Because optogenetic implants require genetic modification of neurons to work, they are not yet approved for human use. However, for people who’ve lost the ability to see, hear, or feel, the neuro-key offers hope of radical transformation for a better life, including through devices that can relay information that stimulates the same neurons that receive information from our eyes, ears, and skin. Related uses may include rehabilitation – particularly following the neurological devastation of a stroke – and cybernetic control of robotic arms, hands, legs, and feet.

And as relief from one of the greatest curses imaginable – chronic pain – the neuro-key may offer pain modulation without the expense, side effects, and addiction risk of opioids and systemic drugs.

While the team used only a single micro-LED for its first paper, Wu said that the new approach with an array of 64 micro-LEDs allows a near-infinite number of patterns that vary in “frequency, intensity and temporal sequence.” The real-time control over each LED allows researchers to relay those complex light patterns to the brain that may mimic the sensory experience of distributed neural activity, rather than that from narrow, localized activation.

“Developing this device required us to rethink [how] to deliver patterned stimulation to the brain in a format that is both minimally invasive and fully implantable,” said John A. Rogers, director of Northwestern’s Querrey Simpson Institute for Bioelectronics. The bioelectronics pioneer led the project’s technology development, and is also the Louis Simpson and Kimberly Querrey Professor of Materials Science and Engineering, Biomedical Engineering and Neurological Surgery in the McCormick School of Engineering and Northwestern University Feinberg School of Medicine.

“By integrating a soft, conformable array of [up to 64] micro-LEDs, each as small as the diameter of a single strand of human hair, with a wirelessly powered control module,” says Rogers, “we created a system that can be programmed in real time while remaining completely beneath the skin, without any measurable effect on natural behaviors of the animals.”

Unlike the exposed, wired device in this image, the wireless, sub-scalp neuro-key allows normal movement, and in future human applications, “invisible” use protecting medical privacy

The New York Times / C.C. 2.5

According to Rogers, these design aspects of the neuro-key represent “a significant step forward in building devices that can interface with the brain without the need for burdensome wires or bulky external hardware,” and offer value not only for neuroscientific research, but the potential for improving human health.

Optogenetic technology isn’t new; indeed, as New Atlas has reported, Kozorovitskiy and Rogers developed a programmable, wireless, battery-less implant in 2021 for remotely controlling mouse interactions. But many similar devices needed fiber-optic wires that hindered the animals’ movements, whereas the new neuro-key lets the mice move normally.

Because the implantation hides the device, rather than exposing it like a mad scientist’s “brain electrode,” future human users would be free from other people’s reactions, a critical component of medical technology that protects human privacy and dignity while restoring full function.

Source: Northwestern University

Revealed: The Impact of Trump Tariffs on Small Business Importers Costs $25,000 Per Month

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A stark new economic analysis reveals the Trump administration’s trade policies are extracting a heavy toll from Main Street, with small-business importers paying approximately $25,000 more per month in tariff costs since April 2025. The report, published Dec. 17 by the Center for American Progress (CAP), a left-wing think tank, details how a “chaotic approach” to trade and the elimination of key import exceptions have created a financial crisis for entrepreneurs during the critical holiday season.

According to the analysis by Michael Negron and Mimla Wardak, the administration’s “Liberation Day” tariff announcement triggered a sharp increase in duties collected from American businesses. From April through September 2025, CAP estimated, the roughly 236,000 small-business importers in the U.S. paid an average of more than $151,000 in additional tariffs compared to the same period in 2024. (CAP cited the centrist Chamber of Commerce’s research on the small-business importer sector of the economy.)

“The Trump administration’s broad, costly, and frequently shifting policies threaten to undermine one of the strongest engines of the American economy,” Negron said in a statement to Fortune. “A season of opportunity for small businesses has turned into one of uncertainty.”

The burden is not limited to larger enterprises. The report found “mom-and-pop” businesses—those with fewer than 50 employees—paid, on average, over $86,000 more per business during this six-month window than they did the previous year. The outlook for the immediate future is equally grim: CAP projects that if current monthly costs persist, the typical small business will face a tariff bill exceeding $500,000 in 2026, potentially resulting in additional layoffs, bankruptcies, and delayed investments. For the holidays, CAP concludes the tariffs are a “costly lump of coal” in American small business’ collective, proverbial Christmas stocking.

Administrative red tape stifles growth

Beyond direct financial costs, small business owners are struggling with a sudden increase in bureaucratic red tape. The administration eliminated the de minimis exception, which previously allowed low-value shipments to enter the U.S. without duties or extensive paperwork. This policy change has forced businesses to prepay new tariff rates and complete complex customs forms for millions of shipments that were formerly exempt.

Jyoti Jaiswal, founder of OMSutra, a small business selling sustainable fashion and home goods, told CAP the changes have forced her to consolidate shipments and block more capital upfront. Jaiswal noted her company now spends 10 to 15 hours on tariff-related administrative work per shipment, up from eight to 10 hours previously, preventing her from passing costs on to consumers without losing competitiveness.

Similarly, Legrand Lindor, CEO of LMI Textiles, told CAP his medical supply company went from spending zero time on tariff paperwork to spending four to five hours per transaction. Facing a 20% increase in product costs—roughly $80,000 in additional spending—Lindor was forced to scrap plans to open a new warehouse in 2025.

The rising costs appear to be cooling the labor market for small firms. Data from payroll provider ADP shows that businesses with fewer than 50 employees laid off 120,000 workers in November 2025, the highest number of small-business layoffs in five years.

While the administration claimed foreign nations would pay these costs, the report emphasizes tariffs are taxes paid by American importers. Goldman Sachs calculated that of August 2025, businesses had absorbed 51% of the cost of tariffs, though they had passed 37% onto consumers through higher prices. A survey by Small Business Majority from late 2025 indicated 74% of small-business owners are now worried about their business surviving the next 12 months.

Compounding financial pressures

The tariff crisis coincides with other financial headwinds. The report highlights the expiration of enhanced Affordable Care Act premium tax credits in 2026 threatens to double premiums for millions of entrepreneurs and small-business employees.

With the holiday season typically accounting for at least one-quarter of annual revenue for retailers, the convergence of high tariffs and administrative confusion has delivered what the report describes as “a decidedly unhappy holiday season” for the nation’s 236,000 small-business importers. Without a change in policy, these businesses face the prospect of escalating costs and reduced investment heading into the new year.

For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.