Trump raises tariffs on Chinese imports by 45% or affects textile exports

The stabilization of the global economy, strong consumption in the Mainland, and the “Belt and Road” and “Industry 4.0” all provide opportunities for the Chinese textile and clothing industry. However, after Trump was elected as president of the United States, he threatened to list China as a currency manipulator and impose punitive tariffs. Trade protectionism has resurrected. In the uncertain external environment, investors must also pay attention to corporate profitability. Bigger export trade companies are the first to bear the brunt.

The United States has always been one of the most important export markets for China's textile and clothing industry. Trump’s proposal to increase tariffs on Chinese imports by 45% will cause a fatal blow to the textile export industry. Although punitive tariffs may not be actually implemented, under the influence of the Trump effect, the investment risk of companies with a small U.S. business share is relatively small. According to Citi statistics, Li & Fung's U.S. business revenue accounted for 61.9% of revenue, and Jiuxing Holdings also had 49.7% revenue from the United States, but Shenzhou International and Pacific Textiles' U.S. business income accounted for 12.6% and 10.3%, respectively. The US market is less dependent.

Trump claims to withdraw from the Trans-Pacific Partnership Agreement (TPP), which is undoubtedly a positive message for non-TPP member states. Including the United States, TPP's 12 member countries account for 40% of the world's total economic output. TPP is committed to lowering tariffs among member states, and also proposes that trade among member states cancel import tariffs on all commodities. However, non-TPP member countries' trade will be greatly impacted. . If TPP is grounded after Trump's debut, the influence of China's "dominant" Southeast Asia Regional Comprehensive Economic Partnership Agreement (RCEP) will inevitably increase, which will help ease the trade barriers of textile exports.

Of course, even if TPP is rejected by Trump, it does not mean that the United States will not exclude China’s trans-Pacific free trade negotiations in other forms. The export trade of the Chinese textile and garment industry is still facing uncertain risks.