{"id":5319,"date":"2025-02-07T16:00:42","date_gmt":"2025-02-07T15:00:42","guid":{"rendered":"https:\/\/magazine.lineapelle-fair.it\/?p=5319"},"modified":"2025-02-14T17:04:54","modified_gmt":"2025-02-14T16:04:54","slug":"trump-2-0-duties-and-the-construction-of-an-old-new-world","status":"publish","type":"post","link":"https:\/\/magazine.lineapelle-fair.it\/en\/trend-en\/trump-2-0-duties-and-the-construction-of-an-old-new-world\/","title":{"rendered":"Trump 2.0 duties and the construction of an old new world"},"content":{"rendered":"

On Tuesday, 4 February 2025, US duties on all Chinese imports were triggered. A decision that has and will have substantial consequences in the redefinition of the global supply chain also for fashion and accessories<\/strong><\/em><\/p>\n

Massimiliano Viti<\/p>\n

 <\/p>\n

Mr Peng is a sales manager for a small shoe factory in Jiangsu<\/strong>, China, and PVH<\/strong>, a US giant with over $9 billion in sales that owns brands such as Calvin Klein<\/strong> and Tommy Hilfiger<\/strong>. They are the two opposite poles of the new world that Donald Trump has decided to create by imposing a 10% tariff <\/strong>on all Chinese imports <\/strong>into the US. The new tax took effect on Tuesday, 4 February 2025, and threatens to disrupt all production chains with a progressive effect. Starting with the fashion industry.<\/p>\n

An old new world<\/strong><\/h3>\n

‘We used to sell about a million pairs of boots a year. The staff, once numbering more than 500<\/strong>, has dropped to just over 200,<\/strong>‘ Mr Peng<\/strong>, 45 years old, who did not want to reveal his first name, told the BBC. <\/a>Peng attributes this decline to the first <\/strong>Trump mandate <\/strong>and his tariffs. Today, Peng asks, “What direction should we take in the future?” He reveals all the uncertainty about what Trump 2.0 means for him, his colleagues, and China.<\/p>\n

Companies such as Nike<\/strong>, Adidas <\/strong>and Puma <\/strong>have already relocated part of their production from China to Vietnam and other Southeast Asian countries. Chinese companies <\/strong>have also relocated, reshaping supply chains, although Made in China remains important. According to a report by Research and Markets<\/strong>, about 90% of garment factories in Cambodia <\/strong>are now Chinese-owned or operated. Peng’s employer has also considered moving production to Southeast Asia. This would save the company but would result in the loss of the workforce, leaving some people who have been with the company for over 20 years on the street.<\/p>\n

PVH on the ‘unreliable’ blacklist<\/strong><\/h3>\n

PVH<\/strong>‘s business changed in the blink of an eye. When the Chinese Ministry of Finance placed the US company on a black list <\/strong>of ‘untrustworthy entities<\/strong>‘. According to experts, being added to this list could prevent PVH from doing business in China or could result in fines or penalties. The decision is part of a broader package of economic measures that the Chinese government has announced in retaliation to the tariffs <\/strong>imposed by Trump. PVH was included because it would discriminate against and interfere with the operations of Chinese companies reported from Beijing. The most likely hypothesis put forward by CNN <\/a>is that this decision is a measure against the company for its refusal to source cotton from Xinjiang<\/strong>.<\/p>\n

Real economy<\/strong><\/h3>\n

The cases <\/strong>of Mr Peng and PVH are two diametrically opposed cases <\/strong>that make us realise what, in the real economy, the impact of the trade war that Trump has initiated is. Albeit more timidly than he had envisaged. It is precisely extreme uncertainty <\/strong>that dominates the market. ‘Creating uncertainty is probably part of President Trump’s strategy,’ said Goldman Sachs <\/strong>economists. Although the 10 percent tariff is lower than the one Trump threatened before the presidential election, investors and analysts expect a knock-on effect <\/strong>in sectors that depend on Chinese production.<\/p>\n

What will happen in the US?<\/strong><\/h4>\n

They believe the impact will be less<\/strong> for many clothing brands and more for retailers in the US. “There’s a lot of uncertainty about how to price <\/strong>goods because now there’s a 10 per cent tariff on top of whatever duty we’re already paying, but what’s going to happen in a month or two?” Matt Priest<\/strong>, president of Footwear Distributors and Retailers of America<\/strong>, the US retailers’ association, told NBC. <\/a>The typical Made in China trainer already has a tariff of around 20%<\/strong>, including a 7.5% <\/strong>duty added during the first Trump term. With an additional 10% <\/strong>duty, a mid-range trainer could eventually have $18 to $20 more <\/strong>to add to the total cost,’ Priest said.<\/p>\n

According to him, only part of this increase will be absorbed by retailers and other companies throughout the supply chain. So, there will be an increase in the price <\/strong>of Chinese shoes sold in the US. The increase will likely come in August\/September<\/strong>, during the back-to-school period. It will also affect shoes that are mostly bought by the middle class <\/strong>and the economically weaker sections of society<\/strong>. Not only that, but a reduction in sales caused by duties could also lead to job cuts<\/strong>. This is a certainty demonstrated by a study on the effects of Trump’s duties during his first term. During that time, overall manufacturing employment shrank (rather than grew), driving up costs for companies importing parts and materials from China.<\/p>\n

Agility and diversification<\/strong><\/h3>\n

Jefferies analyst Ashley Helgans <\/strong>told Footwear News <\/a>that companies have become increasingly agile in diversifying sourcing since the pandemic. According to the same analyst, the brands with ‘significant’ exposure to sourcing in China are, in order, Skechers (45%), Amer Sports (33%), Nike (18%) and Puma (32%). The CEO of Puma, Arne Freundt, said in an interview taken over by Bloomberg <\/a>that this percentage also includes goods produced in China for the Chinese market since imports from China have dropped to 10 per cent in the US market. Puma increasingly relies on suppliers in Vietnam and Indonesia for the US market, Freundt explained. In addition to the impacts on clothing and footwear, duties are expected to cause an increase in other cost items. For example, logistics<\/strong>, including paper and packaging, are in high demand in e-commerce.<\/p>\n

Read also:<\/strong><\/p>\n