11th November 2020
UK government still hasn’t produced a lorry drivers’ guide
I think many of the alleged uncertainties observers forecast for 2017 are badly misconceived.
At this time of the year, observers typically start pontificating about the challenges facing businesses in the next year
And it’s an odd-on certainty lots of those predictions will be about all the uncertainties facing us. Unsurprising with the leaders of four of the developed world’s six largest economies seeing an end to their political careers in the past six months. But I think those alleged uncertainties are widely misunderstood.
In Europe: much less uncertainty than meets the eye
Europe looks like it’s full of uncertainty.
But only the UK has a mandate for leaving the EU – and the most certain thing about that is the UK can’t leave before spring 2019. The strongest demands elsewhere in the EU are to abandon using the euro, and to increase barriers against immigration.
This all adds up to great uncertainty in the financial markets, and serious risks of economies slowing down. With the growing popularity in France and Italy of parties opposed to membership of the Euro, the common currency’s future again looks uncertain.
But it also means there’s practically zero likelihood of any changes in trading relations between current EU members, or with nations outside, for at least the next two years.
In the US: clear and present uncertainty
President-Elect Donald Trump made several firm commitments on October 22 prior to his November election victory.
Since then he’s confirmed his intention to withdraw from the TPP – but it hadn’t been approved, so the decision to dump it merely stops buyers and sellers speculating about something that may never have happened anyway.
The plan that worried our industry most was probably the one “to direct the Secretary of the Treasury to label China a currency manipulator” – followed by plans to treble duties on Chinese imports if China didn’t accept America’s world view.
Since then, he’s indicated who he wants to be that Treasury Secretary: ex-Goldman Sachs honcho Steven Mnuchin – and Mnuchin’s priorities in a November 30 interview, didn’t seem quite the same as Trump’s:
In the same interview, Trump’s pick as Commerce Secretary (ex-International Textile Group owner, Wilbur Ross) came up with completely different priorities. This talk of higher imports, he said, “are the last thing…The real trick is going to be increase American exports. Get rid of some of the tariff and non-tariff barriers to American exports.”
Many Trump opponents like to seize on differences like these within his team as demonstrations that Trump wasn’t serious. They might, of course, be precisely what crops up whenever a leader hires like-minded managers: they all see different ways of skinning the same cat, and end up with a subtly different plan from what the boss envisaged when he went out hiring. Or Trump and his team might not even realise they disagree.
For instance: what are the plans to renegotiate NAFTA, ban offshoring and fight alleged foreign trade abuses? All a bit less clear.
So seriously mixed messages about what Trump’s team are going to do. But many promises that, the minute they move into the White House, they’ll start doing things that will almost immediately hit the way apparel’s sourced.
It’s just tough to predict what, precisely
Meanwhile in Asia…
The moment Trump announced the TPP was dead, China told America’s former TPP negotiating partners they’d all make terrific members of grand Pacific-centric trade deals China was trying to sponsor.
In fact, these are deals (one restricted to countries round the Pacific, the other originally only including Asian countries) have been discussed for a while, but China now thinks it’s making the running. And they’ve both been in Trade Negotiation Hell – the zombie world of endless talks about talks, with little clear idea of objectives or delivery dates – for years. China’s excited that America might have lost interest in such deals, so it can be the pivot of these endless diplomatic beanfeasts – but no-one’s suggesting either will see the light of day this decade.
So expect no significant change for several years in the regulatory framework controlling how Japan, Australia or New Zealand import their garments.
But for suppliers
One other set of consequences. The immediate prospect of tighter US import restriction will inevitably affect supplier investment in many Asian countries – and that probably includes the past couple of years’ investments by Asian companies in US spinning and weaving (would you invest in a country that would try to fine you if you decided to close?)
So will the longer-term doubts over the EU’s composition and the future of the euro. The next year or so is unlikely to see many suppliers decide to build new factories for exporting to the West.
And for economies?
Now there’s the real uncertainty. And for most people in our industry, it’s the health of our economies that drives profit: uncertainty over things like tariffs are usually little more than an irritation.
It’s hard to believe Europe’s long-term political uncertainty is helping its economy – but Britain’s has survived the shock of its referendum decision remarkably well, and year-on-year GDP growth in the Eurozone is currently about the same as in the US.
There’s no end of complaints from Trump opponents about his potential for economic damage – but most financial indicators have if anything improved since his election victory.
It may turn out that the real lesson of the past six months’ political turmoil is that it all this matters more to commentators than to shoppers deciding how much to pay for a new dress.
And what really makes a retailer or brand successful is how well they understand those shoppers. After all: commentators haven’t been too clever predicting political outcomes this year, have they?