Trump-trade

How Trump’s New China Tariffs Affect US SMBs

Since early March 2018, it’s almost all we’ve heard from the White House.

 

China, $60 billion in tariffs, and an impending trade war are attracting comments and opinions from Chinese officials, and even a spokesperson for MillerCoors beer company.

 

Most recently, Apple CEO Tim Cook has come out in opposition to the tariffs, telling Bloomberg that he “felt that tariffs were not the right approach here,” and that he “showed [Trump] some analytical kind of things to demonstrate why.”

 

Many tech companies have spoken against the White House’s trade debacle with China, citing the fact that US tech companies generate roughly $100 to $150 billion in revenue from China annually.

 

Many tech companies have spoken against the White House’s trade debacle with China, citing the fact that US tech companies generate roughly $100 to $150 billion in revenue from China annually.

 

But, while everyone’s focused on the big guys, small businesses are stuck wondering what to do next, or how all this might affect them.

 

To ease your worries, here are the three ways Trump’s trade tactics may affect US small businesses.

 
 

1. Shaky Relations

 

Everyone knows just how global today’s small businesses are.

 

Whether it’s selling products to overseas customers, or partnering with suppliers outside the US, the contemporary small business relies on international relationships.

 

Imposing tariffs isn’t the best way to foster a healthy relationship. With many news outlets noting how far away from a deal the two countries are, and Trump’s attack on Chinese telecoms company ZTE, it’s hard to see a light at the end of the tunnel.

 

Both governments may introduce sanctions or regulations that halt the flow of goods and services between the two countries.

 

Chinese suppliers may end up wary of doing business with US companies as a result. Even worse, both governments may introduce sanctions or regulations that halt the flow of goods and services between the two countries.

 

Aside from the EU, China is the US’ largest trade partner in terms of total trade, even more than their NAFTA neighbors, Canada and Mexico. Plus, with landing a NAFTA deal looking increasingly grim, small business owners may need to lean even harder on China for their supply and manufacturing needs.

 

Ultimately, US small businesses are far more affected by international relations than people might assume.

 
 

2. Social Media

 

That’s right.

 

Because Trump’s tariffs are focused mostly on technologies in computing and communications, many fear the effect they may have on social media and other online operations.

 

Specifically, Chinese suppliers are vital to companies like Facebook, Google, and Microsoft getting a hold of cheap server and data center equipment. Higher prices could mean job losses, higher prices for customers, and possibly slower speeds for users.

 

We may think of Facebook as our escape from work, and Google our place for looking up how old Betty White is, but they’re much more than that.

 

Chinese suppliers are vital to companies like Facebook, Google, and Microsoft getting a hold of cheap server and data center equipment

 

Social media platforms and search engines represent a large fraction of marketing and advertising potential, especially for US small businesses. The accessibility and relatively low price for promoting goods and services on these websites make them prime locations for small businesses to do just that.

 

Higher prices for social media platforms could mean small businesses have less opportunity to leverage their services. Not to mention the new net neutrality legislation coming into effect June 11th.

 

Check out this article to see what small businesses can do to navigate these social scares.

 
 

3. Product Costs

 

Ultimately, the biggest problem for small businesses when it comes to US-China relations is higher costs.

 

With tariffs on telecommunications equipment, steel, aluminum, and other major sources of revenue for US small businesses, the cost of these products are sure to go up.

 

Suppliers and manufacturers will have to charge more to send to the US, if they don’t decide to just work with ASEAN (Association of Southeast Asian Nations) affiliated countries instead.

 

Higher cost for customers may mean US products aren’t as competitive in global markets, which can affect the US economy at large.

 

Higher supply and manufacturing costs for small businesses ultimately means increased costs for customers. Higher cost for customers may mean US products aren’t as competitive in global markets, which can affect the US economy at large.

 

It’s a slippery slope.

 

But, China isn’t the only country small businesses can work with. Check out our international business guides to get the low-down on everything there is to know about global small business.

 

Plus, though it doesn’t look great right now, things are still moving. Talks aren’t at a standstill, and the US has backpedaled on some recently questionable moves. Most notably their axing of ZTE.

 

In the meantime, small business owners can wait it out, and start to diversify their client base and supplier list.

 

Look elsewhere, and communicate with your Chinese partners to ensure you’re both aware and prepared for whatever comes next.

 

No matter how it goes, you can always ensure safe, reliable business payments with Veem, the global payments provider built for small businesses.


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