Trump wins! Is it a blessing or a curse for textile export companies?
Abstract: At 1:40 a.m. Eastern Time on November 9, 2016, the results of the U.S. presidential election were announced. Trump won enough electoral votes (270 votes) to win this election. He will be the first real estate developer president in U.S. history who has no political experience. Markets crashed after news of Trump’s victory broke. The Mexican peso fell to a record low, and the U.S. dollar rose about 13% against the Mexican peso. USD/JPY fell more than 3.5%. Falling below the 102 yen mark
Key words:
At 1:40 a.m. Eastern Time on November 9, 2016, the results of the U.S. presidential election were announced. Trump won enough electoral votes (270 votes) to win this election. . He will be the first real estate developer president in U.S. history who has no political experience.
After the news of Trump’s victory came out, the market crashed. The Mexican peso fell to a record low, and the U.S. dollar rose about 13% against the Mexican peso. USD/JPY fell more than 3.5%. It fell below the 102 yen mark.
Trump’s main political ideas
From the above table we can see that Trump’s coming to power will have a negative impact on China Foreign trade has had a major impact.
1.Tougher trade claims against China
Trump Trump’s trade policy shows a relatively restrictive foreign trade policy and a tough attitude towards China’s trade, especially since Trump has advocated imposing high tariffs on goods imported from China. From a long-term perspective, trade protection policies may weaken the foreign trade profitability of Chinese companies, and the A-share market, especially the export sector (such as the textile and mechanical and electrical industries), will face negative impacts in the long term.
When he was campaigning, he had two propositions that were mainly aimed at China:
, after being elected, he will order the Minister of Finance to designate China as a currency manipulator. Once it is determined that a country has exchange rate manipulation, the United States will not only put pressure on the country’s government through the IMF to adjust its exchange rate policy, but may also retaliate through trade measures such as taxing the country’s exports.
Second, if China does not cooperate with the United States, it will impose levies on all imported goods from China 45% punitive tariff.
Kevin Lai, chief economist at Daiwa Capital Markets in Hong Kong, said that after Trump is elected, the U.S. trade tariffs on China may be reduced from the current level. The increase from 4.2% to 45% will cause China’s exports to the United States to fall by US$420 billion or 87%. And this does not include the withdrawal of foreign investment. He estimated that under the 45% tariff scenario, export manufacturing is expected to move from China to the United States or other countries, bringing the scale of foreign direct investment (FDI) disinvestment to US$426 billion (about 3.91% of GDP). Even a 15% tariff on the low-end version will cost China 1.8% of its GDP.
2.A local trade war between China and the United States may break out
A partial trade war between China and the United States may break out. If Trump is elected, although a full-scale trade war between China and the United States is unlikely to break out, in order to fulfill his campaign promises, he will inevitably make some symbolic gestures and is expected to raise tariffs or set up barriers on some Chinese goods. Sino-U.S. trade Friction will increase. Currently, the U.S. imports from China are mainly mechanical and electrical products. According to the U.S. Department of Commerce, the import volume in 2015 was US$237 billion, accounting for 49% of the total U.S. imports from China. Furniture, toys, textiles and raw materials, and base metals and products ranked second, third, and fourth in the U.S. imports from China respectively. In 2015, the imports were US$55.61 billion, US$42.62 billion, and US$24.87 billion respectively, accounting for 10% of the US’s imports from China. 12%, 9% and 5% of China’s total imports.
3Abandoning the TPP would be good for China
As we all know, special Trump is an active supporter of opposing free trade, calling for bringing manufacturing and job opportunities back to the United States. He even threatened that Americans will withdraw from the WTO!
As an important part of the United States’ strategy of returning to Asia, the TPP is a mini-WTO with a total economic volume accounting for more than 40% of the economy. It excludes China, a major Asian economy. , although the United States has also taken a stance of welcoming China to join the negotiations, its original intention to contain China economically was the original intention of the TPP. Although the TPP is not a trade negotiation targeting the textile industry, more than a dozen member countries attach great importance to the textile field, especially the United States and Vietnam. Therefore, the agreement has attracted widespread attention in the textile industry. The “zero tariffs” and “rules of origin” in the TPP rules have a great impact on industry exports.
Trump Zeng Zai said publicly that he would not allow it��Americans will withdraw from the WTO!
As an important part of the United States’ strategy of returning to Asia, the TPP is a mini-WTO with a total economic volume accounting for more than 40% of the economy. It excludes China, a major Asian economy. , although the United States has also taken a stance of welcoming China to join the negotiations, its original intention to contain China economically was the original intention of the TPP. Although the TPP is not a trade negotiation targeting the textile industry, more than a dozen member countries attach great importance to the textile field, especially the United States and Vietnam. Therefore, the agreement has attracted widespread attention in the textile industry. The “zero tariffs” and “rules of origin” in the TPP rules have a great impact on industry exports.
Trump Zeng Zaiyan publicly stated that he would not allow the United States to join the Trans-Pacific Partnership Agreement (TPP), saying that the agreement was a betrayal of the American people and would expand the U.S. trade deficit and reduce American manufacturing jobs. He believes that the agreement “is an attack on American business” and “a bad deal.”
If the U.S. withdraws and the agreement fails, China can avoid the adverse economic impact of being excluded from the trade agreement.
Conclusion
This election has both advantages and disadvantages for the foreign trade exports of China’s textile industry. Textile enterprises should establish a stronger sense of crisis. Under the spur of any environment, our textile companies must work harder to change, innovate, and accelerate, in order to ensure that orders are not completely transferred and leave room for survival for ourselves!
In addition to having a significant impact on China’s foreign trade. Everyone should pay close attention to the risks of exporting to Mexico. Yesterday, the Mexican peso depreciated sharply by more than 10% against the US dollar, approaching a historical low.
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