Global Trade Policy and U.S. Small Business

By at 11 June, 2018, 1:25 pm

There is a lot of activity on the trade front. Here is the latest update.

by Karen Kerrigan-

Since our founding nearly 25 years ago, SBE Council has be a big supporter of trade and opening global markets for small businesses. Of late, our members have expressed deep concerns about the impact of tariffs on their businesses, the economy, and whether current retaliatory actions taken by U.S. trading partners will spin out of control.  The Administration has either proposed or moved forward with various tariffs on products entering the country, and U.S. trading partners are responding with their own or have threatened to act.

SBE Council has voiced our concerns to Congress, the White House and various agencies – like the United States Trade Representative (USTR).  SBE Council certainly appreciates the President’s desire to protect American IP, however (in the case of China, for example) we believe there is a less complex and costly approach to resolving this issue, which is to negotiate a trade agreement with China that establishes the legal framework and incentives for IP protections, and that addresses other important issues.

Here is SBE Council’s 2018 Policy Agenda for Entrepreneurs and Small Business: Growth via Global Trade and Strengthening IP

SBE Council Provides Testimony at USTR

ICYMI: On May 16, SBE Council chief economist Ray Keating expressed the views of SBE Council at a recent USTR public hearing on the proposed $50 billion in tariffs on Chinese goods. Despite the diverse and vocal concern of the business community, President Trump said he will move forward with the tariffs. A final list of targeted goods will be released on June 15. You can read Keating’s blog post about the hearing here, and official comments submitted for the record here.

Imports are Business Inputs: As noted by Keating in his USTR testimony, more than 55 percent of all U.S. goods imported in 2017 were inputs for U.S. businesses. That is, they were intermediate goods or capital goods. Therefore, increasing tariffs or establishing quotas on imports is in effect imposing a tax increase on a wide array of U.S. small businesses, such as manufacturers.  Representatives from various enterprises represented at the hearing spoke about how tariffs on a variety of goods from China would raise their costs significantly, including presenting daunting challenges of realigning supply chains or even being unable to find alternatives from other suppliers. The clear message was that these businesses would suffer lost business and competitiveness.

Steel, Aluminum, Small Business and National Security

The trend has been established – national security as justification for several big actions recently taken by the Administration, including the imposition of tariffs on steel and aluminum. The action could be a costly one, especially for small and mid-size businesses. The Washington Post profiles one small manufacturer in Ohio whose survival is at stake as a result of these tariffs.  Various SBE Council members have also spoken to the media about the impact, including developer and entrepreneurs Jason Duff in this CNBC story.

In a June 4 story by AP business writer Joyce Rosenberg, small business advocacy groups like SBE Council expressed concern about the tariffs, and what may come as a result of other trade actions being pursued by the White House.

The Latest Data on Trade

SBE Council chief economist Ray Keating looks at the latest numbers and trends on U.S. exports and imports. The numbers are generally positive, but there has been some slippage in recent months. Keating makes the case that the U.S. needs to reclaim its global leadership in advancing free trade.

NAFTA Re-Negotiation Outcome to Date: More Tariffs

Last week, Mexico retaliated against steel and aluminum tariffs by imposing $3 billion worth of tariffs on various U.S. goods and products such as pork, steel and cheese. The Administration is looking at separate negotiations with Mexico and Canada, rather than a three-way agreement, which would essentially end NAFTA. Such a move would drive even more uncertainty into North American supply chains. SBE Council has outlined its principles on NAFTA re-negotiations, which address key areas to modernize the agreement (for example in the areas of data flow and IP protections). NAFTA has had big benefits for small business and preserving the agreement means more growth opportunities for small business and the U.S. economy.

Related Resources:

Keating Testimony Before House Small Business Committee:  The State of Trade and Small Business, April 11, 2018.

Small Business Week and the Global Marketplace, Small Business Insider blog post, May 1, 2018.

NAFTA: Strengthening IP Must Rise as a Key Priority in Negotiations, May 11, 2018.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.

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