The possible impact of Trump’s coming to power on the textile industry

The results of the 2016 US presidential election were announced. Trump won enough electoral votes to win this election. What will Trump do after taking office, and what impact may it have on my country’s fabric industry?

1. Tougher trade claims against China

Trump’s trade policy shows the relative restrictions on foreign trade policy and the tough attitude towards China’s trade. In particular, Trump once 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. For example, the fabric industry may 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 a 45% punitive tariff on all imported goods from China.

According to expert speculation, after Trump is elected, he may increase the U.S. trade tariffs on China from the current 4.2% to 45%, which 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.

　2. A partial trade war between China and the United States may break out

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 definitely make some symbolic gestures, which are expected to target some Chinese products. If tariffs are raised or barriers are set up, Sino-US trade friction will increase. Currently, fabrics and raw materials rank third among the U.S. imports from China. In 2015, the import volume was US$42.62 billion, accounting for 9% of the total U.S. imports from China.

　3. Abandoning the TPP will be good for China

As we all know, 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 also shows its welcome China’s stance of joining the negotiations, but its original intention to contain China economically was the original intention of the TPP. Although the TPP is not a trade negotiation for the fabric industry, more than a dozen member countries attach special importance to the fabric field, especially the United States and Vietnam. Therefore, the agreement has attracted widespread attention in the fabric industry. The “zero tariffs” and “rules of origin” in the TPP rules have a great impact on industry exports.

Trump once publicly stated that he would not agree to the United States joining 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 Manufacturing jobs in the United States. He believes that the agreement “is an attack on American business” and “a bad deal.” If the U.S. withdraws and the deal fails, China would be spared the adverse economic fallout from being excluded from the trade deal.

This general election has both advantages and disadvantages for the foreign trade exports of China’s fabric industry. Fabric companies should feel a stronger sense of crisis. Under the spur of any environment, our fabric 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!

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