Just now! In the early morning of November 6 local time, US Republican presidential candidate Donald Trump declared victory in the 2024 presidential election.
Following Trump's declaration of victory in the 2024 US presidential election, the eyes of global markets quickly focused on the former president's policy propositions and their potential impact on China.
Analysis of eight influences on China's textile industry
1. The impact of tariff policy
The additional tariffs Trump imposed on Chinese goods during his last term have already had a big impact on China's textile industry. The re-election of Trump may continue to implement or strengthen these tariff policies, which will have a greater impact on China's textile industry exports to the United States. It has been rumored that Trump may impose additional tariffs of up to 60% on Chinese textiles and apparel products, which will have a profound impact on the global textile supply chain.
2. Increasing trade frictions
The re-election of Trump may lead to the further intensification of Sino-US trade friction, and further increase the impact of Chinese textile and apparel exports to the United States, which will have a negative impact on China's textile industry.
Textile giants will be barred from entering the United States
On the eve of the US election, on October 31 local time, the US Department of Homeland Security (DHS) published a notice in the Federal Register adding four entities to the list in Section 2(d)(2)(B)(v) of the UFLPA list. In addition, an entity was removed from the UFLPA's Section 2(d)(2)(B)(i) list and re-listed to the Section 2(d)(2)(B)(v) list.
The four new Chinese entities include Changji Eida Textile Co., LTD., Eida Group Co., LTD., Guangdong Eida Textile Co., LTD., and Turpan Eida Textile Co., LTD.
Effective November 1, 2024, U.S. Customs and Border Protection (CBP) will apply the rebuttable presumption that goods produced by Esquel Group, Guangdong Esquel Textile Co., Ltd. and Turfan Esquel Textile Co., Ltd. will be prohibited from entering the United States.
3. The phenomenon of grabbing exits
Historical experience shows that in the window period of about 1 quarter between the tariff timeline and the tariff plan, there will be a more obvious "export grab effect". In the case of Trump's election, it is likely to push up export growth in the first half of next year and be stronger than normal seasonal levels.
The resumption of the Sino-US trade friction in 2018-19 and the gradual maturity of traders' expectations and planning for the tariff policy have led to a year-on-year rebound of 1-2 percent of the exports of listed products in 2-3 months before the tariff policy is implemented. In terms of categories, the growth rate of textile clothing, furniture, machinery and appliances during the export period increased by about 5-10 percentage points.
4. The improvement of enterprises' willingness to invest abroad
If Trump's tariff policy on China is implemented, it will have a great impact on the profit space of most foreign trade enterprises, and only high value-added industries and highly competitive companies can bear the direct export tariffs to the United States, which may further enhance the willingness of enterprises to invest overseas.
5. Enhance export competitiveness
In recent years, with the improvement of all aspects of China's export competitiveness, China's trade surplus has reached a new high, and the trade balance between China and the United States is still at a high level. Trump was elected president of the United States, the increase in tariffs will force China's textile industry to further enhance export competitiveness or open up new export markets.
6. Impact on global supply chain
Trump's immigration and trade policies could affect global supply chains, especially in a labor-intensive industry like the textile industry, which could be affected by changes in labor costs and supply chains. Changes in the global economic environment and the uncertainty of the supply chain have intensified the changes in the global textile and garment supply and demand pattern, increasing the export pressure of textile foreign trade enterprises.
7. Changes in China-Us trade volume
The trade volume between China and the United States declined significantly after 2018, but the bilateral trade picked up during the epidemic in 2020-2021, and the trend reversed again after 2022, and the direct trade volume between China and the United States showed a significant weakening compared with other trading partners. It is expected that with the re-election of Trump and the implementation of high tariffs, the Sino-US textile and apparel trade volume will further decline.
8. Increased tariff evasion
Chinese foreign trade enterprises may export to the United States through ASEAN, Mexico and other places to avoid the impact of rising tariffs.
The countermeasures of Chinese textile enterprises
1. Diversified market strategy. Chinese textile enterprises should consider diversified market strategies, reduce their dependence on the US market, and open up new international markets, such as Southeast Asia, Africa and South America.
2. Increase the added value of products. Improve the added value and competitiveness of products, and enhance the competitiveness of products in the international market through technological innovation and brand building.
3. Flexibly adjust the supply chain. Flexibly adjust the supply chain, avoid the impact of high tariffs through cooperation with other countries, and explore the possibility of establishing production bases overseas.
4. Strengthen cooperation with international brands. Strengthen cooperation with international brands, reduce intermediate links and improve profit margins through direct cooperation with brands.
5. Pay attention to policy developments. Pay close attention to policy developments and flexibly adjust export strategies to respond to possible changes in the trade environment.
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