When President-Elect Joe Biden takes charge of the White House in January, he will face a global economy that has shifted radically over the past four years due to President Donald Trump’s fierce trade war with China. But while Biden’s rhetoric about Beijing seems cool, retailers affected by the import duty are not expecting a change in policy.
“I think President Biden is going to be strict on China – but maybe a different kind of strict,” said Stephen Lamar, CEO of the American Apparel and Footwear Association, an industry trade group. “We think the administration is going to be more predictable and less chaotic than what we’ve seen in the last four years.”
Trump tightened the cornerstone of his foreign policy on China, issuing a tit-for-tat trade statement on Twitter to gain an unfair competitive advantage in international trade, alleging intellectual property theft and currency trade manipulation. As the administration pulled out four tariff trashes on aluminum, steel and household goods to pursue “America First” production policies, retailers scramble to reconfigure their supply chains and export manufacturing in countries outside China Of.
Toymaker Hasbro said last year that the amount of goods produced in China could fall by about 50 percent by the end of this year as a result of tariffs. Williams-Sonoma and PVH Corp, which own brands such as Van Heusen, Tommy Hilfiger and Calvin Klein, both said they would dramatically reduce their share of China-sourced goods by 2020. Abercrombie & Fitch plans to reduce its Chinese imports by 40 percent by the end of 2019. The companies moved the majority of their manufacturing to countries such as Vietnam, India and Mexico, with a small portion of the US moving to reduce tariff costs.
“this year [sourcing] About 50 percent will be out in China, “Hasbro CEO Brian Goldner told investors in June. About 20 percent of revenue in the US comes from products made in the US, while the rest of the product comes from India, Vietnam, Ireland and other markets around Are made in. The world, he said.
“To continue to see the true shape of China’s footprint as we continue to see global demand and global sourcing,” Hasbro said.
But when there was chaos in Trump’s “go it alone” strategy to reduce the country’s dependence on China, Biden’s “Made in America” plans on multilateral alliances and to bring back important supply chains to the US He promised to invest $ 400 billion in procurement to boost domestic manufacturing and invest $ 300 billion in research and development.
Biden would not reject the new tariffs, but he is likely to “use the tariffs when they are needed, but supported by a strategy and a plan,” Tony Blinken, a former Obama adviser – who is expected as a possible secretary of state Is being postponed. New administration – said in September.
After years of uncertainty, and the economy still reeling by a global epidemic, retailers welcomed the stability that could come with the cooling trade tensions of the Biden administration internationally. And after two years of overhauling their supply chains, it is unlikely that retailers will welcome another dramatic move.
“Businesses need market stability, global business relationships that do not change at all times, everywhere from lack of talent, long-range planning and constant distraction.”
David Retail, senior vice president of government relations for the National Retail Federation, said “retail and everyone in the American economy in every way, including farmers and exporters and manufacturing, will benefit from reducing trade tensions around the world.” , A retail industry trade group.
Box CEO Aaron Levy Tweeted Biden emerged as the winner in the presidential race after Saturday: “It’s great for American competition. While the magical Biden can’t do anything, that’s it. Businesses need market stability, global trade relations Those who do not turn on a whimsical, genius. From everywhere, long-range planning, and a lack of constant distraction. “
The fastest growing Chinese economy in the world has become too big for America to ignore. And away from free trade, a stance that is shared across the political corridor presents a challenge for companies whose only source of products is China.
“Moving away from China would be bad for brides in America and it would be bad for us,” said Kelly Means, co-founder of online dress company Anomaly. His business margin has declined because of tariffs, Means said, because he could not make the change in sourcing overnight, noting that around 80 percent of the world’s Western-style gowns originate in China.
“We are represented on a microscopic scale, with massive uncertainty and catastrophic bottlenecks for us and our team in China,” Means said. “I’m not feeling more optimistic on the Chinese front, because no one is having that conversation. We have an inconsistent bipartisan consensus that appears to be a soft anti-trade sentiment on both sides.”
Boston Consulting Group managing director Erin George said some retailers who could not increase production outside of China swallowed the cost of tariffs before shipping with consumers. With some products, companies adjusted the thickness of the tablet or removed decorative elements to keep consumer prices down, George said. In other cases, they stop selling certain products altogether if the cost of manufacture reduces profits.
“Retailers are always thinking about ways of profitability and tariffs,” she said. “Retailers pulled a lot of levers that they had to pull in their toolkits.”
According to the Industrial Development Organization of the United Nations, China makes up more than a quarter of the world’s manufacturing output. For the US, total clearance from China would be a tall order.
Boston Consulting Group partner Michael McAdoo said China dominates some areas of electronics and may not be easily manufactured by some other countries that do not have the infrastructure to manufacture them. China is also strong in production, but Vietnam, Turkey and India dominate in other textiles such as cotton or polyester.
“Selective relief can occur in some categories,” Mac Edu said. “But I wouldn’t say that one day there will be a magic wand and it will all go away.”