The Possible Impact of Trump's Inauguration on Textile Industry

The results of the 2016 U.S. presidential election reveal that Trump won enough votes to win this election. What will Trump do when he takes office and what impact will it have on China's textile industry?

1. Stronger Trade Advocacy with China

Trump's trade policy shows the relative restrictions of foreign trade policy and his tough attitude towards China's trade, especially his advocacy of imposing high tariffs on imports from China. In the long run, trade protection policies may weaken the profitability of Chinese enterprises in foreign trade, such as the textile industry, or face negative impacts in the long run.

When he ran for office, he made two claims, especially against China.

First, after being elected, the Minister of Finance will be ordered to designate China as a currency manipulator. Once it is established that a country has exchange rate manipulation, the United States will not only exert pressure on the government through the IMF to adjust its exchange rate policy, but also retaliate through trade means such as taxation of its exports.

Second, if China does not cooperate with the United States, it will impose a punitive tariff of 45% on all imports from China.

Experts speculate that Trump's election may raise US trade tariffs on China from 4.2% to 45%, which will reduce China's exports to the United States by $420 billion or 87%. This has not included the withdrawal of foreign investment.

2. A possible outbreak of a partial trade war between China and the United States

Trump was elected. Although a full-scale trade war between China and the United States is unlikely to break out, for the sake of fulfilling campaign promises, it will inevitably make some symbolic gestures. It is expected that tariffs or barriers will be raised on some Chinese goods and trade frictions between China and the United States will increase. At present, textiles and raw materials are the third largest imports from China by the United States, with imports of $42.62 billion in 2015, accounting for 9% of the total imports from China by the United States.

3. Abandoning TPP is good for China

As we all know, Trump is an active advocate against free trade. He calls for bringing manufacturing and jobs back to the United States. He even threatens that Americans will quit the WTO.

As an important part of the U.S. strategy of returning to Asia, TPP is a small WTO with a total economy of more than 40% of the global economy, which excludes China, a major Asian economy. Although the U.S. also welcomes China to join the negotiations, its original intention of starting TPP is to contain China economically. Although TPP is not a trade negotiation for the textile industry, more than a dozen member countries attach great importance to the textile industry, especially the United States, Vietnam and so on. Therefore, the agreement has aroused widespread concern in the textile industry. Among TPP rules, "zero tariff" and "rules of origin" have the greatest impact on industry exports.

Trump had said publicly that he would not allow the United States to join the Trans-Pacific Partnership Agreement (TPP), saying it was a betrayal of the American people and would widen the United States trade deficit and reduce manufacturing jobs in the United States. The agreement is considered "an attack on American business" and "a bad deal". If the United States withdraws and the agreement fails, China can avoid the adverse economic impact of being excluded from the trade agreement.

This election has both advantages and disadvantages for China's textile industry's foreign trade exports. Textile enterprises should establish a stronger sense of crisis. Under the impetus of any environment, only by making greater efforts to change, innovate and accelerate internationalization can our textile enterprises guarantee incomplete transfer of orders and leave their own living space!