The U.S. Chamber of Commerce, in partnership with Google, released a new study today on the economic impact of U.S. small business exports. The study examines the current economic contributions of small business exporters, common obstacles small businesses face when exporting, and the role technology can play to expand opportunities for small business exporters.
“With 95 percent of consumers residing outside the United States, America’s future economic growth depends on the ability to sell beyond our borders,” said Tim Day, senior vice president, U.S. Chamber’s Technology Engagement Center. “Today’s digital tools and technologies are empowering businesses of all sizes to reach beyond our borders, access new markets, and acquire new customers. The result? Increased sales abroad which translates to more money and more jobs for everyday Americans here at home.”
Based on a first of its kind, national survey of more than 3,800 nonfarm small businesses, the study “Growing Small Business Exports: How Technology Strengthens American Trade” uncovered some surprising, encouraging, and actionable findings.
For starters, while more U.S. small businesses are exporting than previously realized, most small business do not export which means there is tremendous opportunity for future growth. To achieve such growth, both the private and public sector must work together to help small businesses overcome their most commons barriers to exporting, including foreign regulations, tariffs and customs procedures, and payment collection. Digital tools and technologies, along with regulatory relief, can play a critical role in helping small business exporters reach their full potential.
Additional key findings include the following:
- 9% of small businesses currently export either goods or services—a higher export rate than previously realized—and account for nearly one-quarter of all U.S. exports
- Small business exports contribute significantly to the U.S. economy, generating $541 billion in output in 2017 and supporting more than 6 million jobs.
- However, most U.S. small businesses do not currently export so there is a tremendous opportunityfor future growth.
- The top three export challenges small businesses face are foreign regulations (such as taxes, data localization requirements, privacy rules, and liability risks), tariffs and customs procedures, and payment collection.
- With better access to overseas markets, small businesses project a 14.2% increase in sales, which would increase economic output by $81 billion and add 900,000 jobs.
- While 92% of small businesses that export use digital tools, only 17% report that they have excellent or good access to technology to solve problems related to exporting.
- 61% of small business owners believe technology can help to overcome the top three barriers to exporting.
“Small business exports support more than six million jobs across all 50 states, and add over $540 billion annually to the American economy,” said Karan Bhatia, Vice President of Government Affairs and Public Policy for Google. “Still, there’s a huge opportunity for more small businesses to sell overseas. If policymakers and the business community can help small companies overcome some of the challenges of exporting—like language barriers, customs issues and payment challenges—we could create nearly 900,000 additional jobs in the U.S.”
For small business exporters to reach their full potential, it will require a commitment by all stakeholders, including both the public and private sectors. To that end, we support the following policy recommendations to boost small business export growth:
- Develop a collaborative initiative between the federal government, state governments, the private sector and other stakeholders to assist U.S. small businesses to use technology for exporting.
- Encourage innovators and technology providers to develop and distribute digital tools that address barriers impacting U.S. small business exporters.
- Develop data-driven strategies to understand and overcome exporting barriers facing U.S. small businesses.
- Building on the United States-Mexico-Canada Agreement (USMCA), prioritize the negotiation of additional market-opening trade agreements that benefit small business exporters—including rules in areas such as digital trade, de minimis customs rules, and the elimination of nontariff barriers that disproportionately affect smaller businesses.
- Ensure trade finance opportunities are available to prospective U.S. small business exporters.
The study was released today at an event on Capitol Hill, featuring representatives from the U.S. Chamber of Commerce and Google; Reps. Steve Chabot and Bob Latta; and small business owners Marc Pichik of Smart Retract in Dubuque, IA, Wei-Shin Lai of SleepPhones in Eerie, PA, Chad Price of Kettle Bell Kings in Austin, TX, and Choon Ng of Rainbow Loom in Farmington Hills, MI.
The full study can be found here.