Trump was re-elected as US President! Cross-border enterprises may face potential new challenges

It is learned that according to the vote counting results, the US Republican presidential candidate and former President Trump was announced as the 47th President of the United States in the early morning of November 6 local time.

Trump delivered a victory speech to supporters at the Palm Beach Convention Center in Florida, thanking the American people for their trust and promising to "make America great again." As the election results are settled, Trump's actions during his term will have an important impact on US trade policy and Sino-US trade relations, and will further affect cross-border companies.

New round of tariffs: rising costs and profit pressure

Trump said that tariff policy will continue to be one of his important tools to reshape the US economy. According to his latest tariff proposal, the US will impose a minimum tariff of 10%-20% on all imported goods, while the tariff on Chinese goods will be as high as 60%. This measure will significantly increase the cost of Chinese exports and directly hit Chinese cross-border companies that rely on the US market.

In addition, the Trump team proposed a policy of ultra-high tariffs on specific companies, including imposing a 200% import tariff on American companies that relocate production abroad, in order to encourage companies to stay in the United States. This policy may cause Chinese manufacturers and cross-border exporters to face greater market uncertainty. In addition, Trump also plans to impose additional tariffs on Chinese-branded cars imported from Mexico, further limiting the market share of Chinese companies in the United States.

For Chinese cross-border enterprises, the expansion of tariff measures will lead to reduced profits and reduced market competitiveness, especially for price-sensitive products. Higher tariffs will force enterprises to bear higher production costs, and passing on the costs to consumers may lead to a decline in sales.

Chain reaction: supply chain restructuring and currency devaluation

The new round of tariff policies may also have a negative impact on the global supply chain, forcing cross-border companies to readjust their production and procurement plans to avoid the impact of high tariffs. For example, many companies may consider moving production from China to other countries with lower tariffs. The reorganization of the supply chain may also exacerbate global commodity price fluctuations, especially in key manufacturing areas.

At the same time, the new tariff policy may also trigger a chain reaction in the currency market. Sino-US trade tensions tend to push up the US dollar exchange rate, as the increased demand for safe-haven assets makes the dollar stronger, and a stronger dollar will increase the price of Chinese goods in the international market, making export competitiveness less competitive. Chinese cross-border companies may suffer losses due to exchange rate fluctuations, especially when exports are settled in US dollars, and a depreciation of the RMB exchange rate will cause corporate profits to shrink.

The raw material costs of many cross-border enterprises are closely related to exchange rate fluctuations. If the RMB continues to depreciate, it will increase the import costs of enterprises, thereby raising the overall production costs. In terms of inflationary pressure, according to global financial institution Goldman Sachs, for every 1 percentage point increase in the actual tariff rate, the core PCE price will increase by 0.1 percentage point. The increase in the price of imported goods caused by high tariffs will eventually affect consumers, and this situation also poses a challenge to cross-border enterprises that rely on imports.

Changing consumer behavior: Retail demand becomes more conservative

Trump's election and continued rate cuts may boost business confidence in the economy in the short term, leading to more hiring and investment, which will be a welcome change for the labor market. But over time, rising prices will push up nominal retail sales, while real sales may fall. Looking back at 2022, when supply chain shocks caused inflation to soar, US retail sales grew 8.0%, but consumer purchases and discretionary spending decreased.

Further price increases could push consumers to choose products with better value for money, such as private labels or goods from low-price retailers such as Temu. Many retailers that benefited from the last inflation surge may find it difficult to keep prices low if they face high tariffs. Companies engaged in high-end product exports will also face greater pressure as their high costs and customized products will lose competitiveness in a high-price environment.

In general, after Trump was elected as the US president, the potential new round of tariff policies has posed a higher challenge to Chinese cross-border enterprises. Multiple pressures such as high tariff measures, the need to restructure the supply chain, and exchange rate fluctuations will affect the export profits, production costs, and market share of enterprises. In order to cope with the uncertainty brought about by tariff policies, enterprises should improve the efficiency of supply chain management, optimize product portfolios, adjust export strategies in a timely manner, and seek more international market cooperation opportunities to reduce dependence on exports to the United States. Enterprises should also pay attention to exchange rate risk management and cost control to adapt to the ever-changing international market situation.

Author ✎ Rayna/

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