Trump’s trade war against China has already been put in a backseat during the Covid-19 crisis, and also when US president Trump wins the upcoming elections, the state of the economy might not allow him to uphold the current tariffs, says business analyst Ben Cavender to the Jing Daily.
Jing Daily:
According to Ben Cavender, the managing director at China Market Research Group, the trade war has taken a backseat to COVID-19 and the economy over the last couple of months. “If Trump wins, there will be a lot of discussion about the general economy, so there might not be the bandwidth to keep the tariffs up. The focus will be more on how to stabilize things in the US economy.”…
“I think also we are probably looking at a scenario where he tries to de-escalate on the tariffs front,” Cavender said, adding, “calling things “a win,” even if nothing really changes.
“It’s unlikely we’ll see more aggressive tariffs — particularly as the dollar is weakening right now. So this should, in theory, make US exports more appealing to overseas buyers more — so this adds to his story of resetting the trade balance.’”
Should Trump be re-elected, a continuation of taxes on foreign luxury goods could have a positive impact on fashion companies in the US — although those benefits are more likely to be felt by bigger over small to medium-sized businesses. Smaller companies should also be further hampered by the recent announcement that Trump is delaying additional Coronavirus stimulus packages.
As Cavender explained, Trump has always favored big corporations, and this is unlikely to change. “With Trump, you’re likely to see large amounts of interest directed to corporations, and if you have the connections, you’ll have more access to unrestricted cash to use any way you want,” Cavender explained…
The fashion industry is now undergoing a Darwinian-style overhaul, and not all labels will survive, regardless of the election outcome. But luxury and China are intrinsically intertwined, and China’s consumers have been pivotal in this recovery. As far back as March, they turned to revenge spending in China’s stores. On International Women’s Day (March 8), brands on Tmall experienced double-digit sales growth, as compared to last year.
Cavender confirmed that labels are reliant on favorable relations with China now more than ever, and the sales numbers bear that out. He added: “the brands doing well are the ones that have been able to connect with Chinese consumers digitally during the crisis.” And, if the US continues its tariffs on European luxury, local brands are unlikely to ever replace those sales among domestic consumers.
Perhaps jewelry might benefit, as consumers could swap in a national brand, said Ortelli. But in reality, that is unlikely, he added: “Due to the unique attachment consumers have to their preferred labels. Honestly, in luxury, the consumer usually has brand loyalty and is not looking for an alternative.”
Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.
Are you looking for more experts on the trade war between China and the US? Do check out this list.
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