With the dust still settling on one of the biggest shocks in U.S. political history, many inside fashion are starting to think deeply about what a Trump presidency could mean for online apparel sales and the industry as a whole.
As pundits found out to their cost during the election itself, it’s notoriously difficult to predict which approach Trump will eventually settle on in any given situation. The President-elect has, however, more or less set his stall out on a host of issues at this stage, and we can at least start filling in some of the blanks around what to expect post-Inauguration.
Let’s start with the good news.
Fashion Has a Potential Friend in the White House
Though the industry at large may have given Trump the cold shoulder in the immediate aftermath of an incredibly fractious campaign, there’s no denying that he arrives into the White House with more background in the business than pretty much any candidate before him. Add in the future First Lady and various Trump family members’ own ties to fashion, and you’d expect the industry to have something of a top seat at the table throughout the next four years.
Just how friendly those relations will be remains open to question, however. Initial reaction to Trump’s win from leading fashion lights has been far from positive but, as Business of Fashion recently argued, that’s not likely to stay the case for very long. The official, conciliatory post-election statement from the NRF may well reflect a more likely approach for the industry to take.
Taxation and Tariffs Could Be a Bittersweet Mix for Fashion Brands and Retailers
Trump’s policy pledges around corporate tax are unambiguously pro-business. The prospect of both lowered corporate taxes and wider systemic reform could be a significant boon for both major fashion brands and retailers alike. If Trump delivers anything like his proposed 20% corporate tax rate reduction, there won’t be many major businesses complaining in the fashion world or elsewhere.
Fashion giants shouldn’t be celebrating their potential tax windfalls too early, however. The sting in the tail may come in the form of tariffs, an area where the industry is potentially particularly widely exposed due to its global supply chain. Though it’s impossible to tell how serious specific campaign proposals such as a 45% flat tariff on Chinese imports will turn out to be, it’s highly likely that we’ll see a significant restructuring of trade tariffs sooner rather than later under President Trump – both NAFTA and TPP are already in the crosshairs.
While it’s still too early to tell exactly which way the winds will blow on trade and tax, there’s no doubt that retailers and brands are already nervously eyeing up changes. GT Nexus’ recent retail executive survey, for example, found 44% expecting cost of goods to rise and over a third planning to raise the price of their own goods. How those figures translate into specific fashion verticals once policy starts actually being made will be a fascinating area to keep an eye on throughout 2017.
There’ve been a number of excellent recent pieces diving into trade and tax specifics that could affect retailers down the line – check out Corinne Ruff’s work at RetailDive and Kelly Warner’s legal take for more details.
Unknowns Still Loom Large
If there’s one thing the election has taught us, it’s that we should be wary of peering too deeply into the crystal ball when it comes to anything to do with Donald Trump. There are still plenty of varying degrees of unknowns lurking out there. Everything from currency instability and uncertainty over labor and visa regulations, to potentially personal spats with major retailers has the ability to significantly upset the apple cart down the line.
One thing seems fairly certain, however. After a relatively stable decade in terms of international trade and tariffs, the impending arrival of both Brexit and President Trump suggest that business as usual is off the table for the foreseeable future. Just as in other sectors of the economy, fashion firms will need to be increasingly agile and capable of weathering unexpected surprises in order to truly thrive in the future.