Assessment of Tariffs and Their Impact on Small Businesses & Education in the U.S.

The PBS article, Trump Favors Huge New Tariffs. How Do They Work?, outlines Donald Trump’s renewed push for high tariffs as a mechanism to bolster the American economy. While Trump argues that tariffs will create jobs, shrink the deficit, and even prevent wars, mainstream economists warn of inflationary risks, economic slowdowns, and retaliatory measures from other countries. This analysis focuses on how such tariffs could impact small businesses and education in the United States.

Impact on Small Businesses

Small businesses often rely on imported goods, materials, and machinery to operate efficiently. A sharp increase in tariffs would drive up costs for these businesses in multiple ways:

1. Higher Operating Costs – Many small businesses depend on affordable imported goods, particularly from China and Mexico. Tariffs would raise costs, forcing businesses to either absorb the losses or pass them on to consumers.
2. Reduced Global Competitiveness – Businesses that export goods may face retaliatory tariffs from other nations, making American products more expensive and less attractive internationally.
3. Limited Access to Affordable Equipment – The article highlights that Trump threatened a 200% tariff on John Deere exports from Mexico. Such measures would make it difficult for small firms to afford essential machinery and agricultural tools.
4. Supply Chain Disruptions – A globalized economy means that even businesses that do not directly import goods may face disruptions in supply chains, affecting pricing and availability of critical components.

Case Example: The retaliatory tariffs placed on U.S. goods during Trump’s first trade war led to significant job losses in sectors like agriculture and manufacturing. Many farmers had to rely on government bailouts due to lost Chinese markets for soybeans and pork. A similar impact could hit other small business sectors if new tariffs spark another round of trade wars.

Impact on Education and Workforce Development

The educational sector—particularly higher education and workforce training—could experience several indirect effects of aggressive tariff policies.

1. Increased Costs for Schools and Universities
2. Implications for Entrepreneurship Education
3. Tuition and Funding Challenges

Policy Considerations

Given the risks associated with widespread tariffs, policymakers should consider the following:

1. Targeted Tariffs Instead of Blanket Measures – Instead of imposing 20-60% tariffs on all imports, the government could selectively focus on industries where unfair trade practices are proven.
2. Strengthening Domestic Manufacturing Through Education and Innovation – Instead of relying on tariffs alone, investments in workforce training, AI-driven business development, and sustainable entrepreneurship education (as highlighted in my work at BMCC) could help boost domestic economic resilience.
3. Encouraging Small Business Adaptation – Grant programs and tax incentives could help small businesses transition to alternative suppliers or develop domestic supply chains.

Future Options

While tariffs are sometimes necessary for protecting domestic industries, broad and aggressive trade barriers could have unintended negative consequences for small businesses and education. Given the economic uncertainty that widespread tariffs could create, policies focused on workforce development, supply chain resilience, and innovation may serve as a better long-term strategy.