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Small businesses weigh in on possibility of a trade war

  • Many entrepreneurs are extremely relieved that President Trump's tariffs are exempted from the EU, Canada and Mexico since many of them could face huge price hikes.
  • Some use items for which there are no U.S. manufacturers, so the tariffs would hurt small business without helping domestic manufacturers.
  • Main Street advocacy groups agree that Trump's new trade policies may have good intentions, but will cause more harm than good to small businesses.

As President Donald Trump's much-debated tariffs on aluminum and steel go into effect on Friday, some entrepreneurs like Andrew Berman are breathing a sigh of relief.

Berman is president of Spectrum Printing & Graphics in Rockville, Maryland. His commercial printing business runs a printing press that utilizes aluminum plates imported from France. He'd been bracing for price increases as Trump has levied a 10 percent tariff on aluminum imports and a 25 percent tariff on imported steel.

To his knowledge, there isn't a domestic manufacturer of the plates he uses, and if he were to find one, he'd have to overhaul his system, a process that could cost hundreds of thousands of dollars.

Before the tariffs were to go into effect, Trump exempted the European Union from the order temporarily, along with other trading partners including Canada and Mexico. The price hikes Berman was gearing up to absorb disappeared, for the time being, as the administration shifts its focus to China. Trump announced a package of up to $60 billion in tariffs Thursday that take aim at China for intellectual property theft.

"I'm going to hope the tariffs were well-intended, but as a domestic manufacturer with 40 employees, doing everything we can to support those employees and to do the best for our customers ... there are unintended consequences," Berman said.

Well-intended or not, Trump's tariffs have received a mostly cold response from Main Street advocacy groups. Many argue that while trade policies tend have pros and cons, they also negatively impact a broad swath of the economy in ways that are often overlooked.

"In general, we think there is more room for harm to happen with small companies than good," said Todd McCracken, president and CEO of the National Small Business Association, a nonpartisan advocacy group. "The ripple effects of higher steel prices and a potential trade war and higher tariffs in other countries that can result from this will hurt companies across the economy."

The group added that according to its most recent data on exports, China is the fourth-largest market for goods produced by U.S. small businesses. "Our small businesses are concerned about likely materials cost increases and ongoing retaliation by China and other countries which could stymie small-business export growth in industries far beyond those targeted by the tariffs," said Molly Day, vice president of public affairs at the NSBA.

That sentiment was echoed by Raymond Keating, chief economist at the nonpartisan Small Business & Entrepreneurship Council, who said there was very little in the way of "upside" in Trump's new trade policies.

"The fact that the administration is concerned about intellectual property is a good thing, but this is not the way to go about it."

The conservative lobbying group the National Federation of Independent Business did not respond to request for comment on the tariffs. However, worries about exporting ranked dead last out of 75 issues polled among its membership on its last "Problems and Priorities" survey in 2016.

For now, entrepreneurs importing from exempted countries like Berman are in the clear. But he's worried about other equipment costs going up with action being taken against China.

"I have no idea where the raw material [in our equipment] comes from. I have concerns about the folders, the cutters and printing presses," Berman said. "I think exempting countries was the right thing to do because the threat of reciprocating tariffs wasn't good for anybody. But he is playing a game of chicken," in exempting trading partners with just a day to go before the order was set to kick in.

The White House did not immediately respond to a request for comment.