slide 1: Donald Trump the Fate of Global Retail
Donald J. Trump the 45
th
President of the United States of America is sure to be a game
changer for the global retailers. He has been quite popular for his views on trade with China
and on creating jobs in the manufacturing sector.
While the world awaits more clarity on his trade policy speculation is rife based on his
campaign rhetoric. We believe it is safe to assume that some massive changes in the tax
labour immigration policy and trade agreements with other countries are on their way.
Here are our two cents based on all Donald Trump has claimed during his election campaign.
Renegotiation or Withdrawal from NAFTA and TPP
Many times during the campaign we have heard Mr. Trump’s views on the North American
Free Trade Agreement or NAFTA and the Trans-Pacific Partnership. He termed NAFTA as “one
of the worst things that ever happened to the manufacturing industry.” He also mentioned that
he will negotiate for a better deal for the American workers and if not he will walk out of them.
In case he decides to walk out of NAFTA there will be a 35 tax on all imports made from
Mexico. This will lead to severe escalation in the prices. Major companies like IBMGM and
Coco-Cola will be under the axe as they manufacture their products in Mexico and ship them
back to the United States.
slide 2: Source:https://assets.donaldjtrump.com/_landings/contract/O-TRU-102316-Contractv02.pdf
The Trans Pacific Partnership or TPP proposes to remove trade barriers between Australia
Brunei Darussalam Canada Chile Japan Malaysia Mexico New Zealand Peru Singapore
Vietnam and the United States. During the election campaign Mr. Trump has referred to TPP as
“a rape of our country”. This is because if the TPP comes into place the American markets will
be flooded with goods produced elsewhere. Mr. Trump has shown strong opposition to this fact
all throughout the campaign. He has promised to the American voters that he will withdraw
from the TPP. Ifthis happens the prices of all the products imported from these 12 countries
will skyrocket forcing consumers to look for cheaper alternatives at home.
After the election of Mr. Trump news has emerged that the Obama administration has given
up on pushing the TPP agreement and its fate now rests with the incumbent Trump
administration.
Import duties and Taxes
Mr. Tump called China a “currency manipulator” and has made it clear that there will be an
additional 12 tax on all goods imported from China. This might be a huge blow to price
conscious retailers such as Walmart. The consumers have to face higher prices due the
increase in the taxes which will push them to look for other alternatives.
Opposition to Automation
All throughout the election campaign Mr. Trump has vehemently opposed automation. If he
continues to impose restrictions on automation in order to protect the American working class
we will see a major slowdown in the American economy. This will also have a huge impact on
global e-commerce as they rely heavily on selling mass produced goods from cheaper sources.
slide 3: Tax Reforms
This comes as a huge relief for retailers as Mr. Trump has promised to bring about massive
reforms in the tax structure especially in areas such as child care and elderly care and offered
tax relief to the middle class. With the reduction in taxes and job creation retailers are hoping
that the purchasing power of the people will increase.
Now it is clearly evident that President Trump has trained his guns for a Trade War with China.
However we do need more clarity on how his actual trade policy will look like in order to
understand the full economic implications on the retail trade.