SMBs Face Policy Headwinds, From Trade Tariffs To SCOTUS

Small businesses have been inundated with a regulatory storm this past week. From a Supreme Court decision with possible implications for small online merchants, to SMBs’ preparations for U.S. trade tariffs, policy is keeping entrepreneurs on their toes.

Surveys gauging the sentiment of the small business owner about shifting rules and regulations – both in the U.S. and abroad – aren’t the only source of information for this week’s B2B Data Digest. PYMNTS dives into the numbers behind the changing regulations that could have a massive impact on small businesses.

Sixty-seven percent of Americans are confident in the small business community, according to a new Gallup poll that found SMBs to have the second-highest level of confidence among Americans, behind only the military. Small businesses earned more confidence among Americans than the Supreme Court, big businesses, banks and the presidency, researchers noted.

Sixty percent of the U.S. Supreme Court’s decisions have been in favor of business litigants since Chief Justice John Roberts was appointed in 2005, according to Inc. reports that cite Minnesota Law Review analysis. With Chief Justice Anthony Kennedy announcing retirement plans, and with expectations for President Donald Trump to appoint a conservative justice to fill Kennedy’s spot, analysts expect the Supreme Court lineup to continue to favor corporate litigants. Ari Ginsberg, professor of entrepreneurship and management for the New York University Stern School of Business, told Inc. that “conservative justices have been good for business,” and the appointment of another one will likely be viewed favorably among business owners.

Canada’s 0.1 percent increase in GDP last April may not seem like much, but small businesses in the country are more optimistic than ever. In its most recent quarterly survey, the Bank of Canada found that SMBs’ optimism is above historical averages, according to The Wall Street Journal. The report was published the same day that Statistics Canada found economic growth had slowed in April compared to the month before, though that 0.1 percent growth was slightly ahead of expectations. Reports noted, however, that the central bank’s analysis of small business sentiment occurred before the U.S. announced new tariffs imposed on metals imported from Canada, the European Union and Mexico. According to the Bank of Canada, SMBs’ strong optimism can be attributed to rising demand both at home and abroad, although new trade tariffs may diminish that outlook.

Fifteen U.S. states have, or will have, laws that require online merchants to collect sales tax, and last week’s Supreme Court ruling is likely to increase that number. SCOTUS ruled that states can collect sales tax from online sellers, and reactions to the ruling have been mixed – even among small businesses. Brick-and-mortar firms now have a level playing field, according to reports from The Guardian, because online retailers were able to lower prices when they didn’t have to collect tax. However, small businesses may struggle to obtain the resources necessary to file taxes in each state and county.

A 2 percent economic growth rate for Q1 was the best first-quarter performance in three years, according to The Washington Post, and analysts say the growth rate could surpass 4 percent in Q2. President Trump attributed that performance to tax reform, while the corporate community seems to be doing its fair share to support the economy, too. According to reports, business investment was up 3.6 percent in the first quarter (though spending on equipment fell, researchers noted). Some analysts, however, say that corporate tax cuts should have bolstered corporate investment more, while Labor Department data shows that tax reform has not made an impact on wage growth. According to The Washington Post, the U.S. Chamber of Commerce and audit firm RSM found that 38 percent of businesses plan to increase investment over the next three years – less than some had hoped. According to RSM Chief Economist Joe Brusuelas, “this is not what we expected.”