New Study: Trade a Big Positive for Small Business

By at 26 October, 2016, 9:29 am

Satisfied business woman in front of cargo container terminal

FOR IMMEDIATE RELEASE                                                           

Washington, D.C. – The Small Business & Entrepreneurship Council (SBE Council) answered misinformed trade rhetoric by the leading presidential candidates in a new report titled “The Perils of Protectionism: Lost Opportunities for Small Businesses and the U.S. Economy.”

Raymond J. Keating, SBE Council chief economist and author of the report, noted, “Make no mistake, free trade – that is, reducing governmental barriers and costs to trade – is a positive for economic growth, and for increased opportunity for U.S. entrepreneurs, small businesses and workers, as well as for expanding choices and reducing costs for U.S. consumers. Anti-trade, or protectionist, declarations on the campaign trail are quite troubling from a pro-growth and small business perspective.”

Among the key points made in the study is the role that trade plays in U.S. economic growth.

From 2000 to 2015, for example, the growth in real U.S. exports equaled 22.5 percent of the growth in real GDP, and the expansion in real total trade (i.e., exports plus imports) came in at 41.6 percent of real GDP growth.

For good measure, trade simply has become a much larger part of our economy. Consider that in 1950, U.S. exports came in at 4.22 percent of GDP, imports registered 3.95 percent, and total trade equaled 8.17 percent of GDP. In 2015, however, exports had jumped to 12.56 percent of GDP, imports to 15.53 percent, and total trade to 28.09 percent of the U.S. economy.

Keating added, “It is critical to understand that trade overwhelmingly is about small business. For example, 97.7 percent of U.S. exporters have fewer than 500 workers, and 37.1 percent have less than 20 employees. Opening global markets means growth and opportunity for entrepreneurs and small businesses.”

Regarding existing U.S. trade accords, it is pointed out in the report that the U.S. has overwhelmingly experienced solid-to-robust real growth in exports to 17 of the 20 nations with which we have agreements. That includes a 275 percent real increase in U.S. merchandise exports to Mexico since NAFTA went into effect.

The study also highlights that the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) would be major positives for small business. On the flip side, Keating explains why and how protectionist measures inflict damage on the economy, using as examples the misguided tariff measures passed in 1921 and 1922, and, most egregiously, the Smoot-Hawley Tariff Act of 1930.

Finally, the study debunks a host of myths swirling around trade, such as free trade costing the U.S. jobs and depressing U.S. wages, and that more imports are an economic negative. In addition, Keating wrote, “For example, a prominent myth is that a trade deficit is an economic negative. However, the data make clear that periods of higher economic growth coincide with shrinking trade surpluses or mounting trade deficits, and slowdowns and recessions coincide with declines in trade deficits.”

Keating concluded, “The Democratic and Republican presidential candidates on the 2016 campaign trail have been railing against free trade, placing the focus of our nation’s economic troubles on trade and globalism. The true culprits include regulatory hyper-activism, increased taxes, unprecedented loose monetary policy, a more intrusive and larger federal government, and ironically, a lack of leadership by the U.S. on reducing barriers to international trade. The good news, as the report lays out, most Americans view trade as a positive for our economy.”

To read the full report click here.

Contact: Raymond J. Keating

631-909-1122 or 703-242-5840


SBE Council is a nonpartisan, nonprofit advocacy, research and education organization that works to protect small business and promote entrepreneurship. To learn more, visit SBE Council’s website: Follow on Twitter: @SBECouncil

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