EDITORIAL: Economic optimism on the rise among small-business owners

Economic optimism — especially among small-business owners — has been on the rise since Donald Trump’s 2016 election. And rightly so. As Fox News reports, the Small Business Optimism Index reached its second-highest level ever in May, with the nation’s small businesses reporting great numbers across numerous key areas.

Despite the widespread optimism, however, the president’s policy on trade could eventually prove to be a drag on these developments.

There is no doubt the momentum has been positive. As Fox reports, the index rose by three points in May, while tax cuts and regulatory changes helped spur increased compensation, positive earnings and sales trends. Some of the latest numbers even broke records.

Employee compensation increases hit a 45-year high, and positive earning trends and expansion numbers were also higher than they’ve ever been in the survey’s history. In addition, positive sales trends are at their highest level since 1995, the percentage of small-business owners planning price increases is at its highest level since 2008, and a net 3 percent of small-business owners report positive profit trends — another all-time high.

The index also shows upward movement in the number of businesses planning to hire both skilled and unskilled workers, as well as the number of business owners willing to pay more to attract workers. More than one-third of owners say all their credit needs have been satisfied, while the number of owners who say they need a loan is the lowest it’s been since 2007.

“Main Street optimism is on a stratospheric trajectory thanks to recent tax cuts and regulatory changes,” Juanita Duggan, CEO and president of the National Federation of Independent Business, told Fox. “For years, owners have continuously signaled that when taxes and regulations ease, earnings and employee compensation increase.”

That stratospheric trajectory could be knocked off course, however, as a result of President Donald Trump’s trade policies — namely his controversial tariffs on aluminum and steel, as well as additional tariffs on various Chinese goods.

The tariffs, intended to help the fortunes of targeted U.S. workers and reduce the trade deficit, have also increased some business costs

For example, an Ohio business owner told CNBC the 25 percent tariffs on steel and 10 percent tariffs on aluminum have driven up prices from his vendors and made planning ahead more difficult. A farmer in Nebraska, who is already dealing with a drop in corn prices over the past few years, told CNBC the 25 percent tariff levied on the soybeans she gets from China will make it harder for her to pay for seed, fertilizers and property taxes and, ultimately, put her family farm “in peril.”

While the economic numbers around small businesses are encouraging, the president should rethink his protectionist policies lest he disrupt the economic stimuli of his tax and regulatory policies.