U.S. Sen. Jeanne Shaheen, D-NH, is advancing legislation that will help small businesses hedge the fluctuating costs of certain commodities, such as fuel. (Courtesy photo)
As if supply and demand pricing isn’t uncertain enough, the on-again, off-again tariffs threatened by President Donald Trump has added an extra level of anxiety for small businesses about the cost of commodities such as fuel.
“For small businesses, uncertainty is one of the hardest things to deal with, and Trump’s proposed tariffs on Canada and Mexico would make the tight margins these businesses operate under even tighter,” said U.S. Sen. Jeanne Shaheen, D-NH.
To help ease some of that anxiety, the senior U.S. senator from the Granite State proposes what’s being called the Helping Small Business THRIVE Act. It would create a program that helps small businesses lock in the cost of commodities, such as fuel, in order to protect against the future volatile price of energy and other expenses.
“The Helping Small Businesses THRIVE Act is designed to help small businesses hedge against volatile changes in costs so that they can continue to grow and keep providing good-paying jobs in our communities,” said Shaheen.
According to the senator, her bipartisan legislation directs the Small Business Administration (SBA) to create a pilot program that allows small businesses to hedge their cost exposure from gasoline, lumber and other commodities with pricing that can fluctuate, depending on supply and demand. Her co-sponsor is U.S. Sen. Bill Cassidy, R-Louisiana.
The program would first start to lock in costs for gasoline, diesel and up to three additional commodities, with special attention given to standard utilities like natural gas or electricity.
Additional commodities and utilities whose costs could be locked in could be added to the program after surveys and feedback from small businesses to assess which products would be most beneficial to them. The SBA would be directed to reach out to small businesses to ensure they are aware of the program and can benefit from it.
Market traders and financial businesses would be excluded from the program to ensure it focuses on small businesses and is not a tool for speculators, according to Shaheen.
Large businesses already protect themselves from inflation by locking in costs through hedging transactions, Shaheen said, adding that the Helping Small Businesses THRIVE Act gives small businesses the ability to access those same tools to protect against pricing volatility.
Here’s an example of how the program would work, as offered by Shaheen’s office:
- Business A buys an option for $.05 to pay no more than $3.50 per gallon of gasoline for 1000 gallons six months from now, locking in their gas cost at no more than $3,550 ($3.50/gallon x 1,000 gallons, plus the $.05 cost of the option per gallon).
- If gas goes up to $5 per gallon, Business A will still pay $5,000 ($5.00/gallon x 1,000 gallons) at the gas station.
- However, because Business A locked in a maximum price of $3.50 per gallon from their hedge through the program, Business A would receive a payment of $1,500 ($1.50 x 1,000), leaving Business A’s net cost at the $3,550 they planned for. Business A would still benefit if gas prices went down by paying less at the pump.
The Trump White House has targeted three countries with tariffs — China, Mexico and Canada — ostensibly to pressure them to address their roles in illegal immigration and/or the flow of fentanyl into this country.
Calling illegal immigration and fentanyl an “extraordinary threat,” a White House-supplied fact sheet says Trump is implementing a 25% additional tariff on imports from Canada and Mexico and a 10% additional tariff on imports from China. Energy resources from Canada will have a lower 10% tariff.
Critics of the action say these tariffs will only serve to raise the prices paid by consumers and businesses because the cost of these tariffs are not absorbed but passed on.
“Tariffs are a powerful, proven source of leverage for protecting the national interest. President Trump is using the tools at hand and taking decisive action that puts Americans’ safety and our national security first,” it says.
Mexican President Claudia Sheinbaum responded to the tariff threat by agreeing to immediately send 10,000 soldiers to her country’s border to prevent the trafficking of fentanyl and other drugs.
Canadian Prime Minister Justin Trudeau said his country would spend $1.3 billion on a plan to reinforce its border with new helicopters, technology and personnel, as well as additional resources to stop the flow of fentanyl.
With those actions, Trump has delayed by a month any imposition of tariffs on Mexico and Canada.
The China tariffs took effect Feb. 4.
Consumer electronics, including cellphones, computers and other tech accessories, make up the biggest import categories with a total of about $427 billion worth of goods imported from China in 2023.
From Canada, the U.S. imports a lot of cars, car parts and energy-related products including crude petroleum, petroleum gas and refined petroleum.
Mexico exports include cars, car parts, electronics, crude petroleum, medical instruments, beer and agricultural products.
Shaheen said her THRIVE Act has the support of The Center for American Entrepreneurship, National Asian/Pacific Islander American Chamber of Commerce and Entrepreneurship, National Association of Women Business Owners, National Small Business Association, Owner-Operator Independent Drivers Association, Small Business For America’s Future, Small Business Majority and Women Impacting Public Policy.
Data from the SBA shows that New Hampshire had 136,506 small businesses in 2023, which is 98.9% of all the state’s businesses. Small businesses accounted for 49.2% of New Hampshire’s employees in 2023.
Earlier this year, Goldman Sachs introduced what it is calling “The Small Business Policy Playbook: Winning Strategies to Drive Economic Growth” to make the current session of the U.S. Congress aware of the issues that are of utmost importance to small businesses.
Among the suggestions in the playbook:
- Amend the retirement startup credit and enhance the paid family leave tax credit to help small employers compete with larger corporations
- Update child care tax credits and strengthen programs to expand the child care labor market in support of working parents.
- Encourage partnerships between the Small Business Administration (SBA) resource partners and workforce programs to offset training costs and upskill workers.
Goldman Sachs created the playbook through its 10,000 Small Businesses Voices program, in conjunction with the Bipartisan Policy Center.
“In a time in which America is looking for common sense, bipartisan wins from Washington, lawmakers should look no further than to the Small Business Policy Playbook for strategies to help small businesses lift up the economy in New Hampshire and across the country,” said Scott Alton, owner of M&C Clothing and Gifts in Amherst and a part of the 10,000 Voices program.
“This playbook provides a road map for how policymakers can support small business owners so we can thrive, grow and create jobs and opportunities in our communities,” he added.
