The recent election of Donald Trump has been met by both shock and delight but mostly, curiosity regarding what’s in store for the ever-growing world of eCommerce. Needless to say, the change will not be sudden or huge, however, there are certain tell-tale signs of changes to come. This article puts forth certain economic views along which eCommerce retailers can tailor their future business interests towards, when it comes to planning for potential changes.
These changes may start to become slightly evident in 2017 if the Trump administration chooses to impose import barriers in an attempt to “Make America Great Again!” and reduce competition from foreign sellers.
Effects of Imposing Trade Barriers
would initially result in huge economic benefits for U.S retailers and manufacturers within the country- due to a sudden increase in the demand met with a supply shortage who will in turn drive the price up on American consumers who are left with fewer choices. This would lead to a population of consumers moving towards becoming sellers. Although it is tough to predict what the success of American sellers will be like in this situation, one thing is for certain- it will hurt foreign sellers of all magnitudes.
At first, many countries might be hesitant in directly retaliating against these import barriers, but eventually, when the global effects are no longer negligible, they will retaliate.
This could come from foreign countries in several different forms such as punitive tariffs or as implied by Trump himself, a reduction in environmental, safety and other standards. This would result in certain products manufactured in the U.S not meeting the standards imposed by the E.U.
All in all, further trade barriers will inevitably lead to an increase in import fees for manufacturers and an increase in consumer prices. As seen with the Brexit, U.S manufacturers will suffer from a weaker currency and the trade barriers in place.
What all this means for eCommerce merchants?
In a few years, a possible drop in the eCommerce sales of U.S merchants could be the result of these higher prices and inability to source the product from elsewhere due to the barriers in effect. U.S sellers should then analyze their inventory and attempt to minimize their reliance on imported goods or any products in general that are prone to minor international trade disturbances. The U.S sales for International sellers would also suffer due to the obligation of now charging U.S buyers a sales tax. However this could be mitigated, indirectly, by looking to different global markets depending on where one is based out of such as Canada, Asia, Australia or New Zealand.
Now with all that being said, the trend has favored the concept of globalization- reduction of trade barriers. However one must never underestimate the extent of change and it has always been a good business practice to plan for the worst-case, all in an attemp to minimize the risks involved.