Donald Trump won the election and is to take the office of the 45th president of the United States. The news spread, and this was followed by the stock fall on Wednesday of Chinese companies. This included Alibaba’s fall of 3.18%, and media portal Xunlei’s fall of 5.91%.
Believing that it is a mistake for America to support free trade with China, and proposing a 45% tariff on imported Chinese goods, the new U.S. President may soon introduce policies that can bring drastic changes to industries and companies – perhaps to Alibaba in particular.
If a trade war is to be declared, the first blow will be felt by AliExpress, Alibaba’s site where Chinese retailers sell to U.S. consumers. Additionally, disputes may then hurt sales on Alibaba’s Tmall platform, where U.S. and international brands sell to Chinese consumers.
“The relationship between China and the U.S. will define our century,” said Alibaba vice chairman Joseph Tsai. He said that China is a vast market for American goods that could create jobs in the U.S., instead of stealing them away, Bloomberg reported.
In fact, slapping tariffs on Chinese goods is unlikely to be helpful for Trump’s plan of bringing back the manufacturing industry to America, even aside from the multitude of possible devastating side effects this tariff policy might cause. One reason is that China has been growing out of its tag of “cheap labor”, according to a survey conducted by the Boston Consulting Group in 2015. The factors that made China a haven for cheap manufacturing are inexorably disappearing.
“It is crucial for both China and the U.S. to maintain a healthy relationship, particularly in this century,” Alibaba founder Jack Ma posted on Weibo, in response to Trump’s victory. “If the world’s largest economy and the world’s second largest economy join hands, together we can tackle so many problems of poverty, disease, and environmental issues. If they refuse to cooperate, however, it would be disastrous.”
Facebook founder Mark Zuckerberg also posted on Facebook, mentioning opportunities of our generation that include curing all disease, improving education and promoting equal opportunities for all citizens. He added, “We are all blessed to have the ability to make the world better, and we have the responsibility to do it. Let’s go work even harder.”
Will the world’s top two largest economies work harder to work together? Or will they fight each other to the point that no-one is a winner?
(Top photo from Baidu Images)