IMPACT of US AND CHINA trade war on APPAREL INDUSTRY
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