PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

The Latest Data on Trade and Small Business

By at 3 September, 2021, 9:38 am

by Raymond J. Keating –

As a group looking to protect small business and spur entrepreneurship, why does SBE Council care about the latest trade data released by the U.S. Bureau of Economic Analysis?

The simplest and most straightforward answer is: Exports represent opportunities for U.S. businesses, including small firms, while practically all imports are inputs – from capital goods to retail products to be sold – for U.S. businesses, again, including small enterprises.

That’s why free trade policies – i.e., reducing governmental costs and barriers, like tariffs (or taxes on imports), to trade – matter to entrepreneurs and small businesses.

The latest numbers (seasonally adjusted) for July 2021 show that exports were up and imports down compared to June. Over the longer term, after factoring inflation into the equation, real exports and imports have not yet climbed back to where they were pre-pandemic. That’s bad news for small businesses, consumers and the economy in general.

Contrary to assertions from various political corners, trade is a positive for U.S. businesses, workers and our economy. And keep in mind that total trade (exports plus imports) accounted for 30 percent of GDP in 2014 and 27.5 percent in 2018, before falling to 26.4 percent in 2019 and 23.5 percent during the 2020 pandemic year.

A vital, dynamic, growing economy is one that is open to trade, providing benefits to consumers, entrepreneurs, businesses of all sizes, and workers. We’ve known this since Adam Smith wrote his seminal Wealth of Nations in the late 18th century. On the policy front, the U.S. needs to explicitly roll back the protectionist measures imposed during the Trump years and aggressively move to advance free trade on all fronts.

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

 

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