# America’s Small Businesses in a State of Transition: How Trump’s Tariffs and Tax Laws are Affecting Them
Small businesses in America are facing uncertain times due to the changes in tariffs and tax laws implemented by the Trump administration. While some are optimistic, others are cautious because they are unsure about the impact these changes will have on their businesses. In this article, we will discuss the effects of Trump’s tariffs and tax laws on small businesses and provide tips on how to prepare for the future.
## CNBC/SurveyMonkey Small Business Survey: A Glimpse into Small Business Owners’ Thoughts on Trump’s Tariffs and Tax Laws
The CNBC/SurveyMonkey Small Business Survey provides insight into how small business owners feel about the current economic climate and the impact of new tariffs and tax laws. The survey found that 58% of small business owners feel optimistic about business conditions, up from 53% in Q2 and 39% in Q3 of 2017. Despite the improvement in economic conditions, small business owners are concerned about the impact of tariffs on their businesses.
Trump’s increased tariffs on foreign goods, such as steel and aluminum, have protected domestic industries but have resulted in higher prices of goods for American consumers and businesses in other industries. As a result, many countries, including China, the European Union, and Canada, have implemented retaliatory tariffs. Although tariffs were intended to protect domestic industries like the American steel industry, they have had unintended consequences for smaller businesses.
## The Ripple Effect: The Unintended Consequences of Tariffs
The ripple effect of increased costs due to tariffs affects businesses that use the products to manufacture their goods. Small businesses that rely on products made by manufacturers using steel in their machinery must also accommodate for increased expenses and raise prices, potentially lowering sales due to higher prices and lower demand.
Additionally, retaliatory tariffs impose added barriers to international expansion of small businesses. American exports will be taxed in foreign countries, making otherwise strong American export companies less competitive in the foreign market.
## Trump’s Tax Cuts and Jobs Act: How it Affects Small Businesses
The Tax Cuts and Jobs Act, signed into law in December 2017, is intended to stimulate the American economy. However, some argue that the act favors large corporations over small businesses because they have more expenses to deduct and are more likely to afford the expenses that are no longer tax-deductible.
Despite the concerns, small business owners are largely optimistic about the Tax Cuts and Jobs Act. The new tax laws lower individual tax rates, increase the business expense tax deduction limit from $500,000 to $1 million per year, and allow companies filing as pass-through entities to deduct an additional 20 percent. As a result, 33% of small business owners plan to increase their headcount over the next 12 months, up from 31% in Q2 and 26% in Q3 of 2017.
However, those who deduct few business expenses in their tax filings are negatively affected by the new tax laws. Expenses such as travel and membership dues are no longer covered, potentially leading to financial difficulties for some small businesses. This, in turn, may make it difficult for them to hire and retain qualified employees, as large corporations tend to offer better pay and benefits.
## Conclusion
Small business confidence is at a record high, but small business owners remain cautiously optimistic about the future due to uncertainties caused by tariffs and tax laws. The main challenge for businesses is to adapt to the changes and to keep an eye on how these changes potentially affect them.
Small business owners should stay informed about new policies and their potential effects on their businesses. Additionally, they should create a contingency plan and seek professional guidance to prepare for the uncertainties of the future.
In conclusion, small business owners must remain proactive and flexible in navigating the ever-changing landscape of tariffs and tax laws. By doing so, they can optimize their businesses and thrive in America’s current economic climate.
