IM­PACT of US AND CHINA trade war on AP­PAREL IN­DUS­TRY

Perfect Sourcing - - Cover Story -

Any­thing that hap­pens in the US di­rectly or in­di­rectly has an im­pact on other economies as well.

With added tar­iff on Chi­nese goods and when it comes to ap­parel, the landed price for the China made goods will be higher com­pared to oth­ers. In that area, the next coun­tries can com­pete to take as much as from those are lost by China. Ap­parel in­dus­try will take a big hit in the light of US’S $200 bil­lion in tar­iffs on China. Due to glob­al­iza­tion, no coun­try has the in­ter­nal ca­pa­bil­ity to match global ef­fi­ciency for the pro­duc­tion of goods and ser­vices.

At the same time, when Chi­nese gar­ment fac­to­ries will lose busi­ness then Chi­nese tex­tile mills have sur­plus raw ma­te­ri­als such as yarn, fab­rics to be sold at a more com­pet­i­tive prices.

If Chi­nese pro­duc­ers mak­ing for the US are hurt they will ag­gres­sively seek for new mar­kets in Europe, Latin Amer­ica, Aus­tralia, Far East Asia, etc. where com­pe­ti­tion will in­crease.

With no prepa­ra­tion Bangladesh would most likely start to day­dream, how­ever, sub­stan­tially will not be able to get any ben­e­fit from there. Just look at the US busi­ness at present in Bangladesh. Wal­mart, Sears, JC Penny, GAP, Levi’s, Phillips Van Heussen, etc. all these busi­nesses are be­ing con­trolled from the busi­ness hub in In­dia. There­fore, In­di­ans are get­ting most of the ben­e­fits out of these US re­tail­ers.

Apart from these most of the US im­porters want to buy in a LDP (Landed Duty Paid). Bangladeshi ex­porters do not want to ac­cept this pay­ment sys­tem. It is true that they can go for se­cured pay­ment un­der LC and ship­ping term FOB. But if we do not try to be com­pet­i­tive by ac­com­mo­dat­ing cus­tomer’s term then they lose the US mar­ket which con­sumes twothird of the world econ­omy.

Ger­man au­tomaker Daim­ler AG has warned that this years’ pre-tax prof­its would be lower than last year be­cause of higher tar­iffs on its high-mar­gin Mercedes-benz sports util­ity ve­hi­cles ex­ported from the U.S. into China.

Trump has also trig­gered a trade fight with Canada, Mex­ico and the Euro­pean Union over steel and alu­minum and has threat­ened to im­pose du­ties on Euro­pean cars. The White House is also pres­sur­ing Canada and Mex­ico to re­write the North Amer­i­can Free Trade Agree­ment and shift more auto pro­duc­tion to the U.S. Fi­nan­cial mar­kets have al­ready sensed this out­come. Over the last three months, U.S. eq­ui­ties have gained 7.1% as China’s mar­kets have lost 9.1%.

The USTR said that the fo­cus of the tar­iffs will be on in­dus­trial goods, par­tic­u­larly in ar­eas iden­ti­fied un­der China’s “Made in China 2025” plan de­signed to en­cour­age growth in par­tic­u­lar in­dus­tries.

In the 21st cen­tury, China’s ex­port has grown by seven times to­day than that at the be­gin­ning of the 21st cen­tury. It is at present world’s big­gest ex­porter of goods with a value of nearly $2 tril­lion a year

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