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After Republican Donald Trump’s win, it is more probable that Alibaba Group Holding Ltd. and Chinese internet companies will lose a lot.
During his campaign, the Republican stated that he will increase global trade while stating China is killing the United States on trade policies and intending taxes on goods as high as 45 percent.
Darrell West, Brookings Institution Vice President, stated that if the policy goes on, there will be devastating results from higher costs of living, globalization end, and global trade wars. He added that Trump has threatened to destroy Chinese trade deals. If this happens, Chinese companies would face great consequences.
Biggest impact will be posed to Tencent Holdings Ltd., Baidu Inc., and Alibaba, which are the web giants in China. Alibaba will face the reality as it has a major business stake to trade in the United States compared to Tencent and Baidu. AliExpress site will likely have lower demands as higher taxes on Chinese retailers are enforced. Tmall platform, sales of U.S. and international brands to consumers in China, would also be hurt.
Gil Luria, Wedbush Securities Inc. said that the election is likely the biggest influence on Alibaba relative to direct and indirect risks. This is in comparison to other internet companies of China. If there will be global trade wars, the chances that U.S. brands and retailers will make business with Tmall will likely be dormant.
Joseph Tsai, Alibaba Vice Chairman, encouraged Trump to concentrate on its Chinese relations, which provides a big market for more American goods and U.S. jobs as the economy also climbs. He also added that the new President should shun isolationistic philosophy, particularly with the second largest economy in the world.
On Thursday, Tsai also told reporters on Thursday that China and U.S. relations will define the century. He added that if there will be no Chinese buyers of American goods, investors from their country will not be able to invest in U.S., and creation of American jobs will be hampered, a source of difficulty will arise.