Mark Tanner assesses how brands active in China are looking at their positioning following the US presidential election

By Mark Tanner*

Amid the hustle of last week’s CIIE – the world’s largest import expo and China’s stage for promoting foreign imports – the re-election of the champion of isolationism, Donald Trump, was the talk of the town. While America’s choice may not have surprised some, the ramifications remain as unclear and unpredictable as the President-Elect himself.

Although Trump’s impact will be felt globally, few countries are likely to be affected quite like China.

Trump is the architect of the US-China Trade War and sweeping tariffs on Chinese goods. China was a focal point in his recent campaign, where he pledged a blanket 60% tariff on Chinese imports. Yet Trump is known to embellish, and his promised iron-fist approach to China may not unfold exactly as people expect.

To start, a 60% tariff would not bode well for the middle Americans who voted for him, hoping for a return to the pre-outsourcing-to-China days. During the last tariff hike, businesses quickly realised how complex, fragmented, and China-dependent supply chains had become.

Reshoring manufacturing from China to the US is not straightforward. Most manufactured goods require numerous components, many of which are made in China and thus still exposed to these tariffs. This became evident with the last set of tariffs. Given the reliance on China for so many goods and components, the biggest impact of new tariffs would be higher prices and inflation in the US – one of the main pain points for the Biden administration and a primary driver of change.

In the longer term, some businesses may look to diversify to other manufacturing locations. However, the challenges of shifting supply chains out of China, coupled with China’s unique advantages as a manufacturing powerhouse, mean that China is likely to remain the world’s factory during Trump’s second term and beyond.

Despite gloomy predictions after Trump’s first round of tariffs, China’s global share of exports has risen by 1.5% since before Trump’s first presidency – over three times the growth rate of the next highest region, Latin America, according to the IMF.

Another card China holds in its relationship with a Trump-led America is Elon Musk. Musk has donated more than $118 million to support Trump’s 2024 campaign, heavily supported him on X and is looking like he will be a primary advisor, even accompanying Trump on his post-election call with Ukrainian President Zelensky. While Musk can be as unpredictable as Trump, he has significant exposure to China, with over half of Teslas manufactured at its Shanghai factory. Musk has often expressed respect for the Chinese people and their innovations, and has supported some of their policy directions that are unpopular in the West. Trump also has close ties with Apple, Blackstone and other companies with significant interests in China.

Regardless of how much inflationary concerns, Elon Musk or other business interests temper Trump’s policies toward China, Beijing is likely to double down on efforts to reduce its reliance on US exports. We can expect to see a stronger focus on driving domestic consumption in China, aiming to increase its contribution beyond the 49.9% of GDP growth seen in the first three quarters of this year – a promising sign for brands targeting Chinese consumers.

While a Trump-led America may fuel nationalism in China, Beijing could take a similar approach to Trump’s last presidency. If Trump once again adopts an “America-First” isolationist stance, Xi might reiterate to the global community that China is open and welcoming, not isolating. Encouraging Russia to end its war could be a strategic move to regain some favour with Europe.

With Beijing supporting an open world, countries like the UK, Australia, New Zealand, Europe, and potentially Canada may benefit from positive brand exposure, along with an influx of students and tourists who would have traditionally chosen the US, reaping the associated halo effect.

China won’t be without challenges under a Trump presidency – neither will the rest of the world. Geopolitical tensions will persist, yet it may not spell the doomsday for China that some predict.

*Mark Tanner is the CEO of China Skinny, a marketing consultancy in Shanghai. This article was first published here, and is re-posted with permission.