Main Street has been excited for the Donald Trump presidency. Optimism picked up on the back of Trump’s resounding election victory. They found an ally in the Secretary of the Treasury, Scott Bessent, who recently echoed his previous small business support, saying, ‘Wall Street’s done great, Wall Street can continue doing well. But this administration is about Main Street.’
Small businesses and others even scored a major win when Bessent’s Treasury Department suspended enforcement of the Corporate Transparency Act’s Beneficial Ownership Information reporting for U.S. citizens and entities, which had mostly been targeted at small businesses.
But recent policy shifts, including substantial tariffs that have directly impacted small businesses and the markets, are standing in massive opposition to a Main Street win.
While Trump and his advisors may be trying to play a long game here, small businesses, which have been brutalized by policy for the last five years, cannot withstand this chaos and blunt-force policy.
Five years ago, a policy assault on small businesses began. Many small businesses were closed in whole or in part, or otherwise impacted by state and local COVID-19 policies, while large businesses were left open and supported in the stock market by the Fed. The PPP program purportedly meant to help affected small businesses was poorly structured, meaning a whole lot of people received funding who should not have, and many of those small businesses that rightfully should have been paid via PPP did not receive enough.
Downstream effects, including labor force issues and supply chain disruptions on the back of COVID-19 policies beat down small business even more.
Then came the Biden administration, bringing historic inflation and an estimated $1.7 trillion in new regulatory costs to small businesses.
The effects from all of the above hurt small businesses disproportionally, because they do not have the scale to be able to absorb the costs and issues the way that larger businesses can. And everyone should care, because small businesses are close to half of the overall economy and more than 99% of all business entities.
If you want to grow the GDP and see the economy thrive, it must be done in concert with the success of small businesses.
Which is why Main Street was hoping that they would get some certainty on tax policy, such as extending the Tax Cuts and Jobs Act, and price stability instead of policy chaos.
Tariffs are directly impacting small businesses that did not have time to implement alternate plans and, in many cases, don’t have alternatives available. I personally know and have heard stories of small businesses that have incurred major financial penalties that they cannot pass along to consumers – and if they did – it would still hurt Main Street.
These are not major car manufacturers or steel producers or defense contractors – these are small and family-owned companies.
If tariffs must remain in place, they should be surgical and targeted. If not, then small businesses should be exempt and not have to bear tens or hundreds of thousands of dollars in costs. The economy will suffer otherwise, and small businesses do not deserve to be subject to what equates to more taxes and fees for them.
Additionally, the secondary effects of the market are also a problem. Not only does Main Street have money invested through 401(k)s and other brokerage accounts that are directly hurt, but when those go down significantly, they spend less. When your customers are feeling less wealthy, that also ends up impacting small businesses.
And while Trump and his advisers may have helped get the dollar index and yield on the 10-year treasury down, no doubt a part of their strategy to deal with the mess President Joe Biden left them, a massive decrease in markets can also mean less collected in tax ‘revenue,’ which could end up making the deficit worse and causing a bona fide debt crisis.
These are not major car manufacturers or steel producers or defense contractors – these are small and family-owned companies.
The administration may be playing a long game, but right now small businesses cannot last that long.
The government should focus on certainty, growth, stability, deregulation and prosperity first, as they address government spending, waste and fraud and then look at addressing other issues.
That’s what Main Street voted for and that’s what they deserve.