PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

2019 Trade Data: Exports and Imports Decline

By at 5 February, 2020, 3:39 pm

by Raymond J. Keating-

The latest trade report from the U.S. Bureau of Economic Analysis provided another reminder that the U.S. suffers whenever government chooses to raise costs and obstacles to free trade.

While U.S. exports of goods and services inched up during the last two months of 2019, the December level was still down notably from May, for example. In fact, exports for all of 2019 actually fell compared to 2018.

The story was pretty much the same for imports. They inched up in December, but were down versus a recent high in May. For all of 2019, imports were down versus 2018.

In fact, trade has under-performed for the past five years. Exports declined in 2015 and 2016, saw some growth in 2017 and 2018, and then declined once again in 2019. (See chart below.) There has been little export growth since 2014. The same basic trend held for imports as well.

Data Source: U.S. Bureau of Economic Analysis

Impact on Small Businesses

This is a direct issue for small businesses, given that 86.6 percent of U.S. exporters have fewer than 50 employees, and 86.4 percent of U.S. importers also have fewer than 50 workers.

There are multiple factors in play here, but one glaring factor has been the U.S. being absent from its traditional role as the global leader for advancing free trade. During the Obama years, the U.S. mostly sat on the sidelines when it came to free trade until very late in his Administration.  During the Trump years, the U.S. has raised costs and created uncertainty due to protectionist policies and threats. With USMCA advancing (Canada must ratify the agreement) and several agreements in the works, let’s hope we have turned the tide and move back to fully opening more global markets.

Whether it be taxes, regulations, government spending or trade, policy matters. And it matters that the U.S. get back to reducing barriers to trade, so that entrepreneurs, businesses and consumers can more freely trade with each other, and take advantage of new and expanding opportunities.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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