Should Trump's re-election worry the fashion industry?

Business

Former and future US President Donald Trump speaks at a campaign event at the West Palm Beach Convention Centre in West Palm Beach, Florida, on 6th November 2024 Credits: Jim Watson / AFP

Donald Trump is once again the US President. Associations and experts fear negative consequences for Europe's economy due to his re-election. His campaign promises, especially regarding higher tariffs on imports, are causing concern for fashion companies.

Trump's return to the White House seems almost certain, with him having secured over 270 electoral votes according to projections so far.

In light of Trump's electoral victory, economists are warning of uncertainties in trade policy. The incoming US President is known for his protectionist stance and has promised tariffs between 10 and 20 percent on all imports from abroad during his campaign. Goods from China could face surcharges of 60 to 100 percent.

Concerns

It is still unclear to what extent the future President will implement his threats. However, European trade associations already expressed their concerns on Wednesday.

“The importance of the globalised trading system, as we have known it and as it has made Germany strong, will continue to lose significance after the election result,” said Gero Furchheim, president of the German industry association Bundesverband E-Commerce und Versandhandel Deutschland, in a statement on Wednesday. “The only question is how radical and swift the upheaval will be.”

Tension was also reflected on the stock market. Shares in export-dependent German car manufacturers such as VW and Daimler fell, as did shares in clothing companies like Adidas and Puma. The Adidas share price dropped by 3.9 percent, while competitor Puma fell by 1.1 percent.

Forecasts

Some economists expect that Trump will initially impose headline-grabbing tariffs. However, even selective tariffs by the US could already impact economic development across Europe. Should these tariffs come into effect, Hamburg-based Berenberg Bank would lower its growth forecast for 2025 for Germany by about 0.2 percentage points and for other European countries by around 0.1 percentage points.

If Trump were to impose a 10 percent tariff on all imports from Europe, the damage could be even greater, according to economists Holger Schmieding and Felix Schmidt.

Dirk Chlench of universal bank Landesbank Baden-Württemberg assumes that the EU “has reportedly prepared with new instruments and procedures” for provocations from Washington. “Nevertheless, negative consequences for exports and investments within the EU seem unavoidable. Continued stagnation, or even a relapse into recession, is likely.”

Up to 24 billion dollars

Before the election night, the US trade association National Retail Federation calculated the potential impact of the tariffs Trump has threatened on consumers. Higher tariffs would make goods more expensive for US consumers. According to a study, they could lose between 46 and 78 billion US dollars (42.9 to 72.7 billion euros) in purchasing power if the threatened tariffs are implemented.

The association also examined the impact on six product categories, including toys, furniture, and clothing and footwear. Consumers would, therefore, have to spend an additional 13.9 to 24 billion dollars on fashion, and 6.4 to 10.7 billion dollars more on shoes. (FashionUnited/dpa)

Big words

Trump has also threatened tariffs in the past. For example, during his previous term, the US President threatened to impose tariffs on French products such as cosmetics, handbags, and other luxury goods. These were intended as a retaliatory measure against taxes in the EU’s digital services law, but were never actually implemented. However, the threats temporarily caused a dip in the stock price of LVMH Moët Hennessy, Louis Vuitton's parent company.

This article originally appeared on FashionUnited.DE. It was translated to English using an AI tool called Genesis and edited by Rachel Douglass..

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