On July 6, 2018, early in the morning, a piece of news reported by “Bloomberg” hit the circle of friends!
Regardless of whether this news is true or false, from this inspirational ship you can reflects the special nature of this day. On July 6, the United States officially imposed a 25% tariff on $34 billion of Chinese goods. If this ship ran slower, it would cost tens of millions!
Trump plans to impose 10% tariffs, and about 927 textile products will be included
However, just five days later, on July 11, The Sino-US trade war is heating up again. The United States has announced a list of 10% import tariffs on Chinese goods worth US$200 billion. According to preliminary compilation by the China Textile and Apparel Industry Federation, there are about 927 textile products (annual exports to the United States are about US$4 billion). ) are involved.
Although the tax increase list will not take effect immediately. It needs to go through relevant review procedures before it takes effect. A public hearing is planned to be held from August 20 to 23. It is initially planned to complete the review and hearing process after August 30.
As soon as the news came out, it immediately shocked the big guys in the textile industry. But I can only sigh to Trump: It’s unreliable!
Playing the tariff card is the most commonly used weapon by both parties in trade disputes. So, when a trade war using tariffs as a means occurs, how will raising tariffs impact the opponent?
The editor learned from visiting some foreign trade companies that if tariffs have increased, our products will have to pay more costs to export to the United States, and we must absorb this extra cost. Usually there are only two ways, one is to continue to reduce production costs, but this is usually not easy to do, after all, the cost is there; the other is to increase the sales price of the product, but this will cause the consumer’s spending power to rise due to rising prices. Product competitive advantage is lost due to reasons such as limited supply and decreased purchase intention! Over time, the product will be overwhelmed by the high price.
my country is the world’s largest exporter of textiles and clothing. At the same time, textiles and clothing exports are also an important part of my country’s trade exports, and the United States is the largest export market for my country’s textiles and clothing. According to statistics, China’s textile and apparel exports to the United States totaled US$38.74 billion in 2017. Among them, the export of clothing was US$27.03 billion, and the export of textiles and manufactured products was US$11.71 billion (including US$220 million of yarn, US$1.84 billion of fabrics, and US$9.64 billion of home textiles, industrial textiles and other manufactured products).
Once the Sino-US trade war starts, it will have a profound impact on the textile and apparel industry. One of the direct impacts is the transfer of US foreign trade orders.
The trade war heats up, and the RMB exchange rate turns from depreciation to appreciation
6.3, 6.4, 6.5, 6.6, 6.7, and now 6.69!
In the previous 75 days, the RMB exchange rate against the US dollar depreciated from 6.26 to 6.72, the cumulative depreciation rate It exceeded 7%, not only erasing all the appreciation in the fourth quarter of last year, but also setting a new low since August 8, 2017. Today, however, the RMB exchange rate has turned from depreciating to rising. Although the magnitude is not large, it does not seem to be a good sign!
Exchange rate is the conversion rate of one currency to another currency. How do exchange rate changes affect trade?
It can be said that compared with the impact of increasing tax rates on trade, the impact of exchange rate changes will be much greater and the lethality will be much more direct!
Chen Xufang of Suzhou Jiulong Weaving Co., Ltd. said: On the one hand, fighting a trade war through exchange rate changes can directly cause exchange losses to opponents. For a company where all raw materials and production are domestically For manufacturers, this impact is huge, because exports must eventually return to the domestic currency in order to continue a new round of production. For example, a pair of shoes with the same price can be exchanged for 10 RMB for 1 US dollar. , now you can only exchange for 6 pieces, which is obviously not cost-effective. Moreover, foreign trade textile companies make very little profit from exporting textiles, and most of them just earn the exchange rate difference. If even this price difference is gone, then the company really has no money to make!
On the other hand, using exchange rate changes to fight a trade war can directly and quickly harm the opponent. With a heavy blow, exchange rate adjustments can be achieved quickly, and the U.S. dollar as an international currency makes it easier to do this! At that time, Japan was forced by the United States to appreciate the yen, and as a result, it fell into the quagmire of the “lost twenty years”. It can be said that the lessons learned from the past are not far away!
At present, the RMB is still in a state of depreciation. As long as the subsequent exchange rate does not rise, it will not follow Japan’s footsteps, and I believe that the Chinese government will also take corresponding measures. Therefore, foreign trade people still Don’t worry too much.
Editor’s note: The Sino-US trade war is uncertain and long-term.��There may continue to be interference in Sino-US trade in the future. What our textile companies have to do now is to improve the value of their products. After all, whether you are worried about the trade war or not, Trump is right there! </p
