After a long election night defying all predictions and polls Donald J. Trump was elected to become the 45th President of the USA. Will the Trump administration be favorable to online retailers or not?
What his election means for e-commerce and retailers will become clearer once his team will lay out the policy agenda. Mr. Trump has already toned down some of his statements, so retailers are eagerly waiting to see what the agenda will be.
Right now, based on his campaign plans we can assume that we will see changes in trade agreements, tax cuts, labor and immigration.
Protectionism = Lower sales of imported products
Trump has expressed himself against National American Free Trade Agreement (NAFTA) and Trans-Pacific Partnership (TPP), calling them “one of the worst things that ever happened to the manufacturing industry.”
These agreements have enabled American retailers to be competitive by relying on overseas good manufacturing and importing merchandise. Any drastic change in the agreements will have huge repercussions and will decrease the access that US-merchants have to foreign goods and increase the prices of all goods.
Import tax = Higher costs or Lower sales
Trump has also been very clear on adding punitive tariffs on goods imported from China. If this scenario comes to life than most retailers will have to increase retail costs. These higher costs will be likely to be passed to the consumers.
On the other hand, if consumers are faced with higher prices they will be tempted to probably search elsewhere for their goods. That may be good news for non-US retailers.
Against Automation = Slower Growth
The newly elected president adamantly opposes modern forms of labor that involve automation.
He has been explicit about protecting American workers from being replaced by machines and if he decides to force companies to invest in traditional forms of labor this may lead to a slower growth rate of e-commerce businesses.
Amazon, who's empire is built on selling goods produced overseas with automation at its core may have a tougher time and investors already fear the Trump's presidency repercussions.
Tax Reform = More profit
While there is a lot of uncertainty and fear over what the negative impact of Trump's presidency will be, retailers are hopeful that he will proceed with the promised tax reform.
He pledged to bring down the corporate tax from 35% to 15% and such measure will likely have a positive impact on the consumer spending, costs reduction, retail investment and job creation.
2016 Holiday Spending
The holiday season is a make-or-break for all retailers. The high sales that occur during this time can make up for the slow months and so merchants are hoping that the outcome of the elections will not impact the spending of the shoppers
It is expected, though, that the shoppers will be more cautious with their spending, which will prompt retailers to be more aggressive with discounts at the expense of their profit margins.
There is a period of general uncertainty, as everyone in America is waiting to see which of his campaign policies will eventually become a law. Regardless of how this presidency will turn out E-commerce has been growing up and will continue to grow up.
We are hoping for a positive outcome and we are eager to see what will the implications for the retail industry be.