Why Small Business Owners and Buyers Support Trump's Plans to Renegotiate Trade DealsMany small business owners are confident the president's strategy will lead to more "fair" deals for the U.S.
ByBob House•
Opinions expressed by Entrepreneur contributors are their own.
President Donald Trump is making good on his campaign promise to renegotiate trade deals. And, he has the strong support of bothsmall business buyersand sellers.
Since taking office, Trump has moved swiftly to withdraw the U.S. from two international free trade deals: the Trans-Pacific Partnership (TPP) and the North American Free Trade Agreement (NAFTA). BizBuySellrecently surveyedover 700 small business owners and buyers to gauge the small business community's support for various aspects of Trump's presidency. The survey reveals a significant majority of both small business owners and prospective buyers stand behind Trump's trade decisions. Because both groupsplay a pivotal rolein worldwide trade, it's important to examine why they support Trump's trade stance -- and what impact Trump's proposed trade plans could have on small business buyers and sellers.
Related:Can Main Street Businesses Thrive in the Trump Era?
Trump and trade: The background behind dismantling deals
On the campaign trail, Trump railed against both established and proposed international trade agreements, including the TPP and NAFTA,认为these measuresdiminished U.S. economic standing and disenfranchised its workers. As president, Trump immediately began dismantling these agreements, signing an executive orderto withdraw from the TPPon his first day in office. Signed by participating countriesin February 2016, the TPP would have created an economic alliance of 12 nations that border the Pacific Ocean. In supporting the agreement, President Barack Obama argued that it wouldempower the U.S. economyamid mounting Chinese economic growth. But, Trump called the TPP a "disaster," usingstrong wordsto confirm his opposition to the deal.
后退出TPP,特朗普NAFTA, a trade agreement between the U.S., Mexico and Canada that was enacted in 1994. NAFTA's main objective is to ease North American trading by substantially eliminating tariffs between the three countries. During his campaign, Trump continuously referred to NAFTA as "the worst trade deal" -- one that incentivized companies to relocate production to Mexico and displace U.S.-based workers. Now, Trump's White Househas indicatedthat it will begin revising the agreement later this year. In the past, Trump has discussedimposing tariffs on Mexicoto fund the construction of his planned wall across the U.S.-Mexico border.
Related:The Real Price Tag of Trump's Mar-a-Lago Trips is Sobering to Small Business
Why small business buyers and sellers support Trump's plans
According to BizBuySell's survey, most owners (66 percent) and prospective buyers (63 percent) are in favor of Trump's approach to renegotiating global trade. In fact, more than one-fifth of individuals planning to buy a business within the next two years indicate they'll be more likely to buy given Trump's trade renegotiations. Here's the thought process of a few supporting respondents from the survey:
NAFTA benefits other countries over the U.S.:As one respondent put it, "The NAFTA treaty is so slanted in favor of both Canada and Mexico that we need to eliminate the deal." While economists might be split on the issue,Trump arguesthat the U.S. has a trade deficit with its NAFTA partners, which has resulted in the U.S. importing more goods from Canada and Mexico than the countries importing from the U.S.
Tariffs enable fair trade:Another respondent highlighted the need for "fair" over "free" trade, and argued that "Tariffs can help balance out trade "partners' who have subsidized or illegal advantages. This is why tariffs were part of the Constitution."
Trump's business acumen:Trump's decades of business experience is another reason the small business community supports his approach to trade. In the view of one respondent, "[Trump] is a businessman. I believe it takes one to know that to effectively negotiate trade deals, you need to do what is in the best interest of America's businesses."
Related:What Trump Doesn't Understand About China's Entrepreneurial Culture
Trump's new vision for trade -- and the small business stake
Trump's move away from established trade deals is accompanied by a new vision for trade. While the strategy is still in its infancy -- there are currently only around 300 words of text about iton the White House website-- it promises "trade deals that work for all Americans" through the appointment of "the toughest and smartest . . . negotiators" who will push "for fair but tough trade deals." Although the White House plan has yet to provide specifics, Trump has indicated that he's in favor of establishing bilateral trade deals with certain nations, such as Japan and the U.K., instead of multilateral deals like the TPP and NAFTA. Despite Trump's outward confidence,there is skepticismaround how effectively this rigidly nationalistic approach to trade will work in practice.
However Trump's international trade plan plays out, small businesses have a massive stake in the outcome. As 2013 U.S. Census Bureau findings reveal, small businesses comprise 97.7 percent of U.S. goods exporters and the value of exports coming from small businesses has grown from 28.9 percent in 2006 to 33.5 percent. Clearly, small businesses play a critical role in both domestic and international trade. But, if Trump imposes tariffs on economic competitors like China, this couldincrease the price of raw materialsfor small businesses. On the other hand, the imposition of tariffs on companies that import goods from international sources could force those businesses to raise consumer prices, making pricing more competitive for small businesses that don't rely on foreign imports. International trade is a subject of uncertainty, but at least for the moment, small businesses are standing behind Trump.
