Washington, D.C. — The Trump administration’s embrace of tariffs to a level not seen in more than a century, supposedly to foster the redevelopment of the country’s industrial base, will do the opposite of what it intends to do. A new Center for American Progress column argues that it is crushing U.S. small businesses, especially those in the manufacturing industry.
The Trump administration’s trade war will hit—and is already hitting—small businesses from multiple directions, including:
- Costlier inputs. For the vast majority of small and medium-sized enterprises, absorbing the significantly higher operating costs associated with a 145 percent tariff on Chinese imports is not a realistic option. Research also shows that more than 70 percent of companies that import from China do not have viable non-Chinese alternatives, leaving small businesses forced to pay significantly higher prices for imported parts, materials, and finished goods.
- Higher borrowing costs. As investors at home and abroad already appear to be losing confidence in the United States, the cost of borrowing will likely increase, leaving many small businesses, which rely on outside financing to expand, unable to profitably take advantage of new opportunities to meet domestic demand should they arise.
- Falling demand. Many American brands have seen their products taken off shelves, with foreign customers demanding non-U.S. alternatives, in addition to the retaliatory tariffs imposed by several key trading partners in response to Trump’s trade wars.
“The Trump administration’s trade wars are squeezing small businesses, which employ nearly half of all U.S. workers,” said Ryan Mulholland, senior fellow for international economic policy and co-author of the article. “If the administration truly wanted to rebuild American industrial capacity, then it ought to invest in U.S. small businesses and entrepreneurs that bring new ideas and new technologies to market, and work with local lenders to support their growth and productivity.”
Read the article: “The Trump Administration’s Trade Wars Are Crushing U.S. Small Businesses” by Ryan Mulholland, Mike Williams, and Doug Molof
For more information or to speak with an expert, please contact Sarah Nadeau at [email protected].