Iran War Wreaks Havoc On Global Trade

The Strait of Hormuz remains legally navigable, but warnings from Iranian authorities and real operational risks, including potential attacks, insurance hikes, and security threats, have effectively halted most commercial traffic.

“Even if the Strait of Hormuz were to reopen, shipping lines would only resume the route once conditions are stable and secure,” says Jill Anstey, associate director of Sea Freight at Baxter Freight. “Carriers will avoid a passage if operational risks are too high, even if it remains officially open.”

To keep goods moving, shipments are being rerouted through ports like Jeddah, with the final leg completed by road. The option is feasible, but it adds time, cost, and extra layers of complexity. Inland inspections, border congestion, and customs bureaucracy further delay deliveries, forcing businesses to rethink logistics and plan for potential bottlenecks.

“In the longer term, this reinforces the importance for businesses to build resilience into their supply chains,” adds Anstey. “Diversifying routes, planning for contingencies, and reducing dependency on single high-risk corridors isn’t optional anymore.”

Founders And Small Business Owners Balance Rising Costs And Tighter Margins

Even when alternatives exist, small businesses feel the pressure first. Shipping costs have surged, lead times have stretched, and inventory planning has become something of a gamble.

Matthew Tran, founder of Birchbury, which produces handmade Vietnamese shoes, is experiencing the dilemma firsthand. “Before the Iran war, we were paying roughly $3,500 to $4,000 per container out of Vietnam,” he explains. “Now we’re closer to $4,500 to $5,200, and our freight forwarder warns prices could climb further.”

Lead times have also increased by three to four weeks, forcing them to prepare for potential inventory depletion. “Our shoes sell for $120, and margins are already tight,” adds Tran. “Pre-buying isn’t really an option; our artisans can’t produce large volumes on short notice. Price increases may come next month or when inventory runs out, whichever comes first. It’s a lose-lose situation.”

For small businesses like Birchbury, these increases aren’t just numbers. They affect hiring, marketing budgets, and overall operational planning. Every unexpected cost can ripple through the business, forcing founders to make tough choices about investment, payroll, or which orders to prioritize.

Trade Disruptions Are Causing Financial Problems, Not Just Impacting Logistics

While disruption starts in the supply chain, the strain quickly shows up in cash flow. “If your cost of goods sold increases 20% or 30% overnight, you have to decide: absorb the increase and watch profit margins evaporate, or raise prices and risk losing customers,” says Cody Schuiteboer, president and CEO of Best Interest Financial. “Most startups make neither decision correctly, which is why they fail.”

Here, the financial model has a key role to play. Most startups lack the working capital flexibility to offer price locks because they operate on minimal cash reserves. Schuiteboer recommends setting up a line of credit for strategic inventory investments.

“This will allow you to take advantage of price-locking opportunities without sacrificing working capital to operational expenses,” he says. “It costs money in interest, but the margin protection far exceeds the cost in multiples.”

Another option would be to look at supplier financing. “If you agree to make a large upfront purchase, they will offer you 60 to 90 days to pay the bill, which equates to interest-free working capital,” he adds.

Forward-buying, locking in prices, and using financing to protect margins, once optional, have become essential strategies, and this financial lens is now critical to survival, turning supply chain decisions into broader strategic considerations for growth and stability.

The Inflation Ripple Effect On Business

The impact doesn’t stop at individual businesses. Rising costs feed through entire supply chains and into consumer prices. Recent research from the Chartered Institute of Procurement and Supply had already warned that due to rising costs of transport, energy, and raw materials, consumer goods prices could soar during 2026. Current events are likely to make such forecasts inevitable, creating more concern for global businesses and consumers about the longer-term impact on supply chain costs and shelf prices.

“The ability to be agile and enter new markets, whether to source new suppliers or expand the customer base, is key to growth,” says Sam Coyne, CEO for Europe at Currenxie. “However, many SME retailers face high costs when dealing with global payments. In some cases, the only option is to pass on these increased costs to the end consumer, which is likely to hit revenues.”

For international businesses, multi-region treasury management, reliable settlement times, and FX risk and margin management are critical. “Traditional bank services aren’t built for international SMEs and offer higher costs and slower processing times,” adds Coyne. “These businesses need access to secure, fast and cost-effective cross-border payments and local market expertise if they are to continue to compete and fuel growth.”

How Founders And Entrepreneurs Can Be Proactive

Some sectors are already adapting. In the U.K., construction firms are grappling with sustained cost volatility. Travis Perkins, the country’s largest building materials distributor, publicly warned in March 2026 that suppliers were issuing energy surcharges in response to the Iran war, a confirmation of what entrepreneurs had been quietly bracing for.

“Steel prices have risen 15–25% since the conflict escalated, while PVC and other building materials surged as much as 33%,” says Saddat Abid, CEO of Property Saviour. “For anyone managing a pipeline of property transactions that involve structural or cosmetic work, those aren’t abstract figures; they're the difference between a profitable deal and a costly one.”

Abid’s first line of defense has been a fundamental shift in how his business approaches contractor and supplier relationships. Fixed-price quotes are now a non-negotiable starting point, negotiated earlier in the project timeline and honored on both sides.

“We’ve moved from treating price agreements as a handshake at the start of a job to treating them as a core part of our risk management strategy,” says Abid. “We lock in material costs with contractors at the point of agreeing on a project, not after. If a supplier can't give us price certainty for a minimum of 60 days, we look elsewhere.”

He has also started pre-buying materials most exposed to volatility, including insulation, pipework, and certain structural fixings, for projects that are several weeks out. This would have seemed unnecessarily capital-intensive 18 months ago, but now reads as straightforward commercial prudence. “Yes, it ties up working capital,” adds Abid. “But the alternative is watching your margin disappear because a product you priced at £800 ($1064) is suddenly £1,100 ($1463) by the time you actually need it.”

A New Operating Reality

The lessons for startups goes beyond the immediate disruptions. For founders, one thing the Iran war has highlighted is that supply chain resilience is no longer optional; it’s a strategic priority. Building flexibility into operations, maintaining cash reserves, and developing diversified supplier networks are becoming part of the small business blueprint.

Beyond logistics and finances, the crisis is also reshaping leadership thinking. Founders are learning to anticipate shocks, weigh trade-offs more deliberately, and make decisions that balance short-term survival with long-term growth. Those that embrace this mindset are not just navigating the current turbulence but building businesses that are more likely to withstand future uncertainty.