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SMEs Taking Conservative Approach to Global Trade Strategy Due to COVID-19

SMEs Taking Conservative Approach to Global Trade Strategy Due to COVID-19

May 11, 2020
As to where they were going to focus their business efforts, 30% said Canada and Mexico, which is down from 55% last year.

A new survey, 2020 International Trade Impact and Outlook, from DHL, reviews several factors currently impacting small and medium-sized enterprises (SMEs) in the U.S.

In addition to surviving COVID-19, trade agreements such as the United States-Mexico-Canada Agreement (USMCA) implementation and the U.S. presidential election, will have an impact on how SME will do business in 2020.

Almost half (49%) of the 2,000 businesses surveyed said the coronavirus has resulted in them taking a more conservative approach to their business’ global trade strategy.  This approach is due to the fact that 78% said that business revenues have decreased either slightly or significantly due to COVID-19.

As to where they were going to focus their business efforts, 30% said Canada and Mexico, which is down from 55% last year. The reason for the decrease is “surprising since the USMCA is expected to be implemented by July 2020, and once it is implemented it will bring significant benefits to U.S. businesses,” the survey said.  But SMEs are uncertain how large that impact will be. While 23% of respondents did not know how they would be impacted and 35% said their business will not be impacted at all.  However, a larger percentage (42%) said their business will be significantly or moderately impacted by the USMCA once it is entered into force.

As far as other international trade, Asia remains a top business target, with almost one-third (32%) of respondents said Asia is the top priority region for their business this year. In last year’s survey, 21% selected Asia as their top priority region.  The report notes that relief from tariffs might be the cause of the increase this year.  Another result of the trade war with China is the emergence of Vietnam and Japan as top trade and manufacturing partners for U.S. businesses.

As far as politics is concerned an overwhelming majority (78%) of respondents said the U.S. presidential candidate’s view on international trade will affect the way they vote this election year. Business owners are willing to make sacrifices to make trade easier: International trade barriers and changes to trade regulations are more than just a headache for business owners—they can have a major impact on sales and operations.

The student concludes “that while many SMEs were hit hard in the beginning of 2020, there will soon be opportunities for businesses to rebuild and grow. Working with an experienced logistics partner, like DHL, can help companies navigate through these uncertain times.”