Insights into the world of small business lending and development
Growing your small business: Exporting to Mexico and Canada
As the global marketplace continues to rapidly grow and change, small businesses in the United States are considering ways to expand their reach and operations as they emerge from the COVID-19 pandemic. According to the U.S. Small Business Administration (SBA), nearly 96% of all consumers live outside the United States, while two-thirds of the world’s purchasing power is in foreign countries. Thus, small businesses that are considering expanding their operations to overseas markets have an opportunity to reach a larger audience and grow their profits.
When it comes to doing business internationally, small businesses can lean on organizations and departments within the SBA, such as the U.S. Export Assistance Centers (USEACs) and Small Business Development Centers (SBDCs), where you will be able to explore the process of exporting at centers across the country and receive free business consulting and low-cost training services.
Exporting to Mexico and Canada
Last year, the United States entered into an agreement with Mexico and Canada (USMCA), which officially replaced the North American Free Trade Agreement (NAFTA). USMCA is the first trade agreement ever to include a full chapter dedicated to small business interests. This agreement comes at a crucial time when small businesses are trying to keep up with changing consumer demands in the midst of global pandemic, opening up new opportunities to grow their reach and serve customers worldwide who are now shopping almost exclusively online.
This new trade law will promote mutually beneficial trade for small businesses leading to freer markets, fairer trade, and robust economic growth.
Here are some of the benefits of the USMCA:
- For the first time in a U.S. trade agreement, USMCA establishes a standing, trilateral committee to collaborate on and expand opportunities for small and medium-sized businesses.
- Lowers barriers to ecommerce by raising the minimum cost of export shipments subject to taxes in Mexico and Canada.
- Establishes a framework for engagement with private sector stakeholders, to include diverse and under-represented small businesses, on implementation of the agreement.
- Allows small businesses to participate in the 21st century economy with a section on digital trade that prohibits duties on products such as ebooks, software, and games.
To learn more about how small businesses can take advantage of the USMCA, visit the U.S. Department of Commerce’s International Trade Administration website where you can find brochures on exporter checklists for small businesses seeking to begin or expand their sales to international customers in Canada and Mexico, and provides information on U.S. government resources and free business counseling available to small businesses.
NOTE: If you’re looking for financing to start your journey as a small business exporter, check out the Export-Import Bank of the United States (EXIM), which is the official export credit agency of the United States.