Trump's victory in the US election: impact on Chinese foreign trade companies

The overall situation of the US election has been determined! Will China's manufacturing industry usher in the 2.0 era of Trump's tariffs?

Trump, the Republican presidential candidate of the United States, announced his victory in the 2024 presidential election.

Is Trump's return to the White House good or bad for Chinese companies?

Trump's earlier remarks on raising tariffs, etc., will make it more difficult for Chinese companies to go overseas?

Is there any impact on GACHN Group's valve bag making machine or other machines?

The United States will continue to put pressure on China on the stage of science and technology and economy.

Both Trump and Harris are enthusiastic about revitalizing the domestic manufacturing industry in the United States and strive to bring manufacturing back to the United States. Trump's strategy includes guiding key supply chains back to the country and prohibiting companies that outsource business to foreign companies from cooperating with the federal government to promote the localization of manufacturing. Harris plans to launch the "America Forward" strategy to promote the modernization of traditional industries.

Trump will fight for another 4 years. What impact will it have on Chinese companies going overseas?

1. Tariff stick 2.0 continues, increasing trade sanctions and tariff barriers

In terms of tariff policies and development strategies for key industries, the two have shown different governing ideas.

In terms of tariffs, Professor Cui Shoujun of the School of International Relations of Renmin University of China pointed out that Harris may continue Biden's China policy. Although her governing style lacks highlights, her foreign policy is relatively predictable and stable. Trump's coming to power may mean the escalation of tariff barriers and the intensification of trade protectionism, which will bring greater foreign policy uncertainty and intensify tensions between China and the United States.

Trump repeatedly emphasized the importance of tariffs in his campaign speeches, and even called it "the most beautiful word." He proposed to impose a 10% tariff on imported products, a tariff of up to 60% or more on exports from specific countries, and a tariff of 100% to 1000% on cars from specific countries produced in Mexico. Trump frequently mentioned China and vowed to get rid of his dependence on China in key areas, showing his obvious protectionist tendencies. At the same time, Trump may strengthen the requirements for technical standards and intellectual property rights of Chinese export products, making Chinese exports face higher barriers. This will directly affect the export profits of Chinese foreign trade companies, and may even cause some companies to lose their competitiveness in the US market. GACHN Group has more than 200 patents, and we have certain guarantees in terms of intellectual property rights.

In contrast, Harris has a more moderate attitude towards tariffs. She opposes excessive taxation and hopes to strengthen the US economy by promoting exports. She criticized Trump's tariff policy as "Trump tax", believing that it would increase the living burden of the American people and claiming that it would "destroy the United States".

After Trump came to power, his extreme tariff policy may have an adverse impact on key overseas sectors such as cross-border e-commerce and new energy vehicles of Chinese companies, thereby disrupting the global supply chain.

In the field of clean energy, Trump and Harris also have completely different policy orientations.

Biden and Harris introduced a number of bills to support the development of clean energy during their tenures, and Harris is likely to continue this policy after taking office. Trump made it clear that if Harris is elected, "fossil fuels will come to an end", and he promised to increase the production of oil and gas in the United States.

Song Xin, founder of Xinfu Think Tank, pointed out that among the key industries, the "new three" industries such as new energy vehicles, lithium batteries and photovoltaics will be directly impacted by Trump's policy adjustments. Trump once said that after taking office, he would abolish the subsidy policy for green energy vehicles and cut subsidies for photovoltaics. This will impact the new energy vehicle and photovoltaic markets, but it may also prompt OEMs to expand their procurement scope and no longer be limited to local or North American manufacturing. In particular, as Musk may become Trump's core advisor on new energy vehicle policies, relevant regulatory policies may be relaxed.

GACHN Group's main business is not within these scopes. Click to learn about GACHN Group's products.

2. Can Mexico still become China's "new three things" springboard?

When talking about the "new three things" industry, we cannot ignore the impact of the US election on the trend of Chinese companies investing in Mexico.

In recent years, the United States has promoted the "de-Sinicization" of the global industrial chain and supply chain, and Mexico has become a beneficiary with policies such as the "US-Mexico-Canada Agreement", attracting many Chinese companies to set up factories. However, the prospects for Chinese companies to invest in Mexico are not clear at present.

According to a previous report by Xiaguangshe, Liu Tanghua, China manager of the Tregia Industrial Park, said that Mexico is one of the few developing countries with similar production and manufacturing capabilities as China, with a solid industrial foundation and a relatively complete industrial system. Against the backdrop of the Sino-US trade war, the United States may refine some trade terms, but it is unlikely to completely abandon the Mexican market. For example, Trump threatened to withdraw from the North American Free Trade Agreement (NAFTA), but in the end he only signed the renamed United States-Mexico-Canada Agreement (USMCA), in which the origin requirement for auto parts was raised from 62.5% to 75%.

Wang Yuquan, founding partner of Haiyin Capital, believes that Trump may block China's way of exporting to the United States through Mexico, but on the other hand, he also needs to move manufacturing back to the United States. It is not clear whether he will support Chinese companies setting up factories in the United States.

Overall, although Mexico has a good industrial foundation, Trump may take measures to restrict China's exports to the United States through Mexico, and the specific impact remains to be observed.

3. Reshape the global supply chain and promote "de-Sinicization"

Trump advocates "Made in the USA" and localization of the supply chain. Especially after the epidemic, he more clearly supports reducing the United States' dependence on the Chinese supply chain. If Trump is re-elected, he may continue to promote the withdrawal of manufacturing in the United States and its allies from China to achieve the goal of de-Sinicization and further weaken China's position in the global industrial chain. This may lead to a reduction in foreign orders or shifting orders to other Southeast Asian countries, which will put Chinese foreign trade companies at risk of losing orders.

Finally, it should be emphasized that although the results of the US election will have an impact on the international situation and the global supply chain system, the general trend of Chinese companies' overseas expansion will not change.

Going overseas has become an important way for Chinese companies to seek new growth points. At present, the overseas strategy of Chinese companies is shifting from labor-intensive industries to technology-intensive industries, especially in emerging fields such as new energy vehicles and lithium batteries. This trend has further enhanced the global competitiveness of Chinese companies. GACHN Group is a technology research and development-oriented enterprise. At the same time, in the fields of cross-border e-commerce and pan-Internet entertainment, companies such as Temu, TikTok Shop, SHEIN are still expanding, and giants such as Tencent, NetEase, and Mihayou have also demonstrated strong profitability in overseas markets.

Song Xin suggested that in the face of escalating tariff barriers, Chinese companies need to flexibly adjust their strategies, optimize market choices, refine customer groups, and gradually transform to high-premium markets.

In response to the possible decoupling of the Sino-US economy, Cui Shoujun believes that Chinese companies will have greater opportunities to go overseas in emerging markets and developing countries.

Faced with a complex and changing international political and economic environment, Chinese companies need to flexibly adjust their overseas strategies to cope with the changing international situation. From passive response to active guidance, some companies and organizations have begun to change their thinking, identify and warn potential risks in advance, and appropriately shape or guide the degree and direction of risk.

In the context of today's ever-changing international political situation, this will become the awareness and ability that more and more Chinese companies must have.

Where will Chinese foreign trade companies go?

In the face of Trump's possible trade policy, Chinese foreign trade companies should adjust their export strategies in a timely manner to reduce risks and open up new markets. Here are several key strategies:

1. Optimize market layout, open up diversified export markets and reduce dependence on a single market

Considering the uncertainty of the US market, foreign trade companies should reduce their dependence on the US through market diversification. For example, actively expand emerging markets such as the EU, Southeast Asia, Africa, and Latin America, and reduce the proportion of the US market to diversify risks. Strengthen the development of markets along the "Belt and Road": With the support of the "Belt and Road" initiative, foreign trade companies can focus on the layout of countries along the route, especially in the fields of infrastructure construction, energy, and communication equipment. Cooperation with these markets can not only expand exports, but also alleviate the impact of changes in the US market.

2. Upgrade product structure, increase product added value and transform to high value-added products

Foreign trade enterprises can gradually turn to the production of high value-added products, such as innovative products, customized products, environmentally friendly and high-tech products, etc., to enhance their competitiveness in the international market. This will help enterprises increase their profit margins and offset the cost pressure brought by tariffs and non-tariff barriers. Improve brand and quality: Enterprises can gradually establish their own brands and increase investment in product quality and design to increase brand premium. Brand building can help enterprises acquire loyal customer groups in the international market and enhance their ability to resist risks.

3. Improve supply chain flexibility, optimize procurement and production layout Multi-location production layout

Foreign trade enterprises can choose to set up production bases in multiple locations or transfer part of their production capacity to other countries, such as Vietnam, Thailand, India and other Southeast Asian countries, to avoid single dependence on China's supply chain. In addition, it can also reduce tariffs and logistics costs and achieve supply chain diversification. Strengthen collaboration with upstream and downstream suppliers: Enterprises should strengthen cooperation with suppliers and optimize supply chain management. For example, by signing long-term cooperation agreements or increasing the proportion of local procurement to ensure the stability of the supply chain and reduce the risk of production interruptions.

4. Strengthen digital transformation, expand online sales channels and use cross-border e-commerce to expand new markets

Against the backdrop of the rapid development of global e-commerce, Chinese foreign trade companies can expand new markets by establishing their own cross-border e-commerce platforms or entering cross-border e-commerce platforms such as Amazon and AliExpress. Cross-border e-commerce channels can not only reduce intermediaries, but also directly face end consumers and increase sales profits. Apply digital tools to improve efficiency: Companies can optimize management processes, improve operational efficiency and reduce costs by implementing digital means such as ERP systems, intelligent logistics management, and data analysis. At the same time, digital transformation can also help companies better respond to market changes and respond quickly to customer needs.