Since Trump's shock climb down on the trade war with China, the policy he is now pursuing is Industrial Policy specifically around manufacturing industries.
A policy the U.S. has assiduously avoided historically. This policy will only further concentrate the economy in large companies at the expense of small companies which is what happened in Korea and Japan.
The S&P 500 has recovered all losses for 2025, but the small caps remain far below the December 2024 highs.
...Trump's tariffs hurt small businesses much greater than larger businesses. Why?
1. Larger businesses can absorb tariffs far more than small businesses
2. US small businesses especially those built over generations, no longer compete on cost. But on quality and brand. But if they have to import higher cost components/inputs, they have to pass on higher costs to their consumers. Which either reduces their business volumes or margin or both
3. Small export-oriented businesses have less agility than larger ones to divert to other markets
...and if Trump's tariffs do result in foreign players setting up manufacturing plant in the US, they will be competing more vigorously with local players (big and small).
...Kubota tractors produced in US are priced at almost 1/2 of Deere tractors for the same horsepower, that has made local companies like Deere to be less competitive, and driving them to produce in Mexico. Deere is a big listed company, think about how that could impact smaller US companies.
...When does Trump really genuinely think about the smaller guys? Other than their votes, of course.
...He is so 'Show Me The Money' like in Tom Cruise Jerry Maguire. So he is surrounded by big businesses and billionaires who can pay for steak dinners at his Mars-a-Lago that small businesses get zero representation.
...Yet most of these small business operators voted for Trump....the old GOP is long gone.
