Fashion braces for another Trump term
Though tariffs could prompt “stagflation” — which includes slow growth, higher prices and high unemployment, according to Wells Fargo — some analysts predict benefits to the US economy under Trump, if lower taxes for corporations and individuals come to fruition. “If Republicans have control of Congress, then this will be easy to enact,” Saunders says. As of Wednesday afternoon, Republicans had taken control of the Senate, but the House of Representatives vote was too close to call. “Ultimately, that’s helpful for retail spending.” Though, analysts warn lowered taxes could be paired with higher inflation.
Luxury consumers are likely to feel optimistic about lower taxes and other Trump policies that favour the wealthy, says Michael Morris, the Chavkin-Chang professor of leadership at Columbia Business School and author of Tribal, a book on leadership psychology. “It does seem like the immediate reaction is one of economic optimism,” he says.
Saunders also points out that Trump enacted his tax cuts in 2017, and they were set to expire next year; if they are renewed, retailers shouldn’t expect a significant boost in spending on the back of tax cuts that were already in place. He adds that there is a possibility Trump cuts taxes even deeper, including corporate taxes, which would be a positive for retailers.
“All in all, I see reasons to be constructive on President Trump’s re-election for global luxury goods,” Solca says. “Most investors believe that President Trump at the White House will boost the economy. A strong US economy means that we have a higher likelihood of a stronger global economy. This should be good for cyclical sectors — and luxury is a cyclical sector.” The stock market reacted positively to the election outcome, with the S&P 500 rising 2 per cent in the aftermath on Wednesday morning.
Hanging in the balance
There’s more to watch out for under a Trump presidency as organisers and media companies warn of the challenges ahead.
Will the fate of the Tapestry-Capri deal change under his administration after being rejected by the Biden administration’s FTC commissioner? How will ‘Made in the US’ brands fare if the cost of materials and manufacturing rise in tandem with tariffs? If Trump follows through on his threats to deport millions of immigrants, what will that mean for America’s workforce across farms and factories? Will tourists stay away? What about regulations and legislation surrounding climate policy and reform?
“At this point, it’s hard to predict what the net-net will be,” says Morris. “This is a tremendous surprise that points to a deep reassessment of the ways we’ve been thinking. This is a bellwether.”
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