Small businesses are receiving much-needed economic relief thanks to two extraordinary Trump administration accomplishments: the Paycheck Protection Program (PPP) and the United States-Mexico-Canada-Agreement (USMCA). This week, the highly anticipated USMCA goes into effect. The trade deal will increase demand for US-made goods and services, adding to the more than 230,000 jobs currently supported by North American trade. That’s great news for farmers, manufacturing firms, and small businesses.
Small business enterprises historically have been responsible for employing nearly half the workforce and generating almost half the Nation’s GDP, but for the past three months, they have been absolutely hammered by the coronavirus pandemic.
For the first time in any United States trade agreement, the USMCA includes a dedicated chapter to small- and medium-sized businesses, as well as other key provisions throughout the agreement that support American entrepreneurs.
More than 82,000 of the state’s hardest-hit small businesses received forgivable loans through the PPP. As a result of this lifeline, small businesses were able to keep their doors open, and many used this financial cushion to pivot their business model and develop a robust online presence, strategically positioning themselves to export goods.
The USMCA is an especially important trade agreement because Mexico and Canada are the two top export destinations for United States small- and medium-sized enterprise goods, and about 75 percent of exporters to Canada and Mexico have fewer than 50 employees.
Indeed, the enactment of the USMCA comes at a critical time to directly benefit United States small businesses, including many minority-owned firms who have been disproportionately impacted by the coronavirus.
For instance, 36 percent of Latino-owned businesses earn most of their revenue online, compared to 18 percent of other small businesses. This new framework will make it easier to sell products to consumers in Canada and Mexico by eliminating complex and cost-prohibitive rules like requiring small businesses to open foreign offices.
Furthermore, the USMCA enforces new customs and trade rules that will cut red tape, making it easier for small businesses to tap into foreign markets and participate in cross-border trade.
Free trade is vital to the long-term success of small businesses like Metal-Era, Inc., located in Waukesha, Wisconsin. The 150-employee manufacturing firm has recently begun exporting its commercial roofing products to Canada. Metal-Era also anticipates continued growth thanks to the company’s participation in Wisconsin Economic Development Corporation’s Global Trade Venture and SBA’s State Trade Expansion Program.
President Trump’s leadership in successfully negotiating the USMCA further demonstrates the administration’s commitment to small businesses, the engine of our economy. For the first time in any United States trade agreement, the USMCA includes a dedicated chapter to small- and medium-sized businesses, as well as other key provisions throughout the agreement that support American entrepreneurs.
Manufacturers like Metal-Era can continue to receive help from the SBA as they navigate expanding into cross-border trade. For instance, SBA can work with a firm’s lender to help overcome financing challenges, such as the reduction in lines of credit or working capital; demand by foreign buyers for advanced payment or performance guarantees; or supply chain issues by applying for an SBA guaranteed export loan.
As a result of the president’s leadership on trade, an estimated $68 billion in new economic activity will be generated and hundreds of thousands of new jobs will be created, helping to further fuel upward mobility in communities that need it most.
Entrepreneurs have an ally at the SBA and a friend in the White House. The USMCA will contribute greatly to helping our small businesses recover, and once again, resume their role as the economic drivers in their communities and our entire Nation.
Jovita Carranza is the Administrator of the U.S. Small Business Administration.