Nov 21, 2018

Small Businesses are the US Economy’s Backbone

Post by Freedom Partners

Small businesses are the backbone of the American economy. The U.S. Small Business Administration says they make up 99.9 percent of all businesses in the country. Rolling back burdensome regulations and passing federal tax reform helped down barriers for small businesses, allowing them to contribute even more to the economy.

But tariffs are undermining that progress. On Small Business Saturday, Nov. 24, we both celebrate America’s small businesses and recognize how they are being hurt by protectionist trade policies.

Big Consequences for Small Businesses

Since March, Freedom Partners has been tracking how tariffs are harming American businesses. Many have had to lay off employees, reconsider investments and make other adjustments in the face of rising costs.

Michael Marceau, co-owner of The Lobster Co., is just one example.

Marceau told Fox News he was cutting his employees’ work hours in the hopes it would allow him to avoid laying them off. Marceau’s small business has 20 employees. China levied retaliatory tariffs on American lobster imports earlier this year.

“Fifty percent of what we do here at the Lobster Co. used to go to mainland China. Since July 6 we’ve sent none,” Marceau said. “It doesn’t just effect my crew. It affects lobster catchers, their crews, the trap makers, the guys that knit heads, the guys that do rope, the guys that do buoys.”

While tariffs hurt businesses of all sizes, smaller companies often have fewer options by which to absorb the cost of navigate tariffs.

Trade Supports Small Business; Small Business Supports the Economy

In 2016, international trade — both imports and exports — supported nearly 400,000 small businesses in the United States.

The year before that, 287,835 small businesses exported goods from the United States.

In 2015, American small businesses employed 58.9 million people (47.5 percent of the private workforce) and businesses with fewer than 100 employees had the largest share of small business employment. That year, small businesses created 1.9 million net jobs.

Not only are small businesses the backbone of the American economy, but they are the embodiment of the entrepreneurial spirit our country is known for. Tariffs are undermining the good they do for the economy.

On Small Business Saturday, we express our appreciation. But the ultimate expression of support for small businesses would be policies that support free trade.