“Trade War Could Affect 11 Million Jobs:” What This Means for Small Businesses

On September 3rd, Axios released a study claiming that President Donald Trump’s “trade war” could affect up to 11 million US jobs.

For context, Axios uses “trade war” to describe both the Trump administration’s ongoing tariff-battle with China and NAFTA talks. Though Mexico and the US have come to a preliminary agreement regarding a NAFTA retool, Canada has yet to join said agreement, or arrange their own bilateral trade deals with either of their North American partners.

According to the study and accompanying map, the recent tariff-exchanges affect a large number of US industries in high concentrations of polling communities won by President Trump.

These industries in large part include agriculture and farming, mineral mining and material extraction, fishing, logging, commercial printing, and more.

With tariffs rising on both sides of this “trade war,” US businesses are caught in the middle. It costs too much to send products overseas, or to source materials from abroad. The problem has only worsened since the influx of tariffs at the beginning of July, which saw 25% tariffs tacked onto $350 billion in Chinese goods.

These tariffs hit industries across the board from goods and services to manufacturing and industry. They have a reciprocal effect on any business or industry that touches the affected ones.

If a small business’ manufacturer, supplier, or main shipping company raises its prices, overhead jumps, and the bottom line suffers. This could greatly affect the survivability of smaller businesses that rely on tax incentives and low costs to do business internationally.

On the other side of the ocean, small Chinese manufacturers have also been hit hard. According to the South China Morning Post, “surveys show growth in business activity” among these manufacturers “has slowed to a fourteen-month low”.

For US businesses whose manufacturers or suppliers are in China, this is very bad news for two main reasons.

1. Chinese manufacturers are less and less incentivized to work with US businesses due to these high tariff costs. US businesses can’t get their supplies, and definitely can’t get them at the reduced rates that Chinese companies famously offer.

2. Small businesses will be forced to work with partners in countries with higher rates, or where they have no historic connection. Making new business partners in new places takes time, and will inevitably slow down production and take chunks out of revenue numbers.

Though President Trump has made recent strides in striking a bilateral NAFTA deal, it’s still to be seen how he and his administration will end the tariff war. In the meantime, industries and businesses on both sides are affected.

As they’ve always done, small businesses will have to grin and bear the big legislative changes trickling down to them.

This will not be the death of small business. Far from it.