The impact of Trump's Election as US President in 2024 on international trade

The result has settled in the new presidential election in the United States in 2024, and Donald Trump once again wined the election. After the Trump administration takes office, it may have a multi-faceted impact on China in terms of foreign trade.


1. The direct impact of tariff policy changes


During the campaign, Trump said he would impose tariffs of 10 to 20 percent on all imports into the United States, and a steep 60 percent tariff on imports from China.
After his election on November 25, he tweeted on the Real Social website: "On January 20, as my first executive order, I will sign all necessary documents to impose a 25 percent tariff on all Mexican and Canadian goods entering the United States."
If this policy is implemented, the cost of Chinese mobile phones, computers, textiles and clothing and many other products exported to the United States will rise sharply. Taking the traditional textile industry as an example, China supplies about 33% of US clothing imports, and Chinese manufacturing dominates the textile manufacturing industry, the high tariffs will force US importers to raise prices, thereby passing on the cost to consumers, which may lead to a decrease in the purchasing power of US consumers for Chinese clothing.


2. The "export rush effect" may return


Historical experience shows that there is usually a more obvious "export grab effect" in the window period of about three months between the tariff timeline and the actual landing of the tariff plan. If the United States announces a tariff plan in the first quarter of 2025 and gradually imposes tariffs in the second and third quarters, it may push up China's export growth level in the first half of 2025.
However, this "grab export effect" may also vary by industry, consumer products are easy to put into production, and there will be more hoarding in the United States. The expensive categories with high inventory and long cycle production, such as automobiles and home appliances, the effect of "grab the export effect" will be relatively weakened, which means the challenge will be greater.


3. Supply chain acceleration transfer


Despite the tariff increase, the United States is still a consumer market with great potential. If the MFN treatment to China is removed, American enterprises will look for alternative suppliers in other regions, accelerate the diversification of the world from China's manufacturing center, and set their cooperative eyes on Southeast Asia, South Asia and Latin America. That may cause part of China's export orders to flow to these regions, split the advantages of China's centralized supply chain, and increase more costs in trade logistics and other aspects.


4. Chinese enterprises accelerate automation transformation
In the face of high tariffs imposed by the world's largest consumer market, the United States, in order to resist this dilemma, Chinese manufacturers may accelerate the promotion of automation and artificial intelligences driven manufacturing, so as to improve efficiency and reduce costs, and try to enhance their competitiveness. In the long run, it will help the upgrading and transformation of China's manufacturing industry, but there will be certain capital turnover pressure in the short term. This war will take at least four years, or more, so keep a long-term stockpile of ammunition.


5. Changes in trade patterns
The US tariffs may prompt China to divert other surplus exports to other major markets, including the European Union, Japan and South Korea, and countries along the Belt and Road. The world trade pattern will be more fragmented, which will intensify regional market competition, provide opportunities for Chinese enterprises to expand into new markets, and promote the development of foreign trade diversification.


6. Changes in domestic trade policy
When facing high tariffs from the United States, the Ministry of Industry of our country will also make corresponding policies for the export of various industries, such as raising or lowering export subsidies. Especially when exporting bulk commodities, enterprises can apply for tax rebates to hedge export costs.Over the next four years, companies across all industries should pay more attention to changes in domestic financial and trade policies before they can quickly formulate concrete responses.