From Rodeo Drive to Fifth Avenue in Manhattan, luxury stores across the country are shutting down operations and bracing for impact following Tuesday’s election results.
Many believe that despite the election’s outcome, civil unrest will unfold in cities across the country leading to protests, riots and looting. The instinct comes over this summer’s Black Lives Matter movement, at times escalating to violence throughout the night from protestors and outside agitators.
Looting remains a divisive issue, split among ideological lines. In fashion, it’s no different. While brands balance the fine line between speaking out and radical activism, it’s estimated labels lost billions throughout June and July as a result of nationwide looting. In a nightmare scenario, disputed election results lead to wide scale tensions across the country, erupting in similar scenarios.
Trump hasn’t committed to a peaceful transition of power if he loses on election night and if polls are any indication, vacating the White House may be an issue. The short term effects of a Biden win would be seen almost immediately: broken storefronts and a crashing stock exchange.
Donald Trump’s election in 2016 prompted a massive celebration on Wall Street, with the market soaring. With mo’ money comes mo’ spending. Despite the coronavirus pandemic raging on in the United States, it looks like luxury brands aren’t going anywhere with both fashion conglomerates LVMH and Kering Group reporting strong third-quarter earnings this year.
On the surface, Trump’s re-election hopes to invigorate a lagging stock market after COVID-related nosedives throughout the year. The republican incumbent’s hands-off economic policy and sweeping tax-cuts only serve to deepen the pockets of massive conglomerates in the U.S.
A downward turn in the market after a Biden-Harris victory won’t last months, but it’ll make shoppers reconsider their high-end purchase in an already volatile international environment spurred by overseas national lockdowns.
And then there’s COVID. Will customers feel safe shopping with lax health regulations? Entering the holiday season with smooth sailing is at the top of the priority list for most brands. An estimated economic stimulus plan thought to implemented by both candidates should increase spending as we head into Black Friday and Christmas– an essential period to stay afloat for retailers across the country.
The holidays seems light years away in a country seemingly falling into organized chaos. It’s now after election day, week, month… now what?
The question isn’t that simple.
Trump starts with a T and so does tariffs. Forty-five hasn’t been the most hesitant when it comes to wrecking trade relationships with countries like China, Canada, Mexico, India, South Korea, Thailand, Taiwan, and Vietnam among others. The president’s “America First,” platform policy aims to shift away from international trade in a series of protectionism-focused policies.
New tariffs proposed in August call for a 25% price tag on nearly .3 billion worth of French handbags and cosmetics products. The tax doesn’t go into effect until after the election in January 2021, but the measure should be alarming for luxury lovers. Chanel, Louis Vuitton, and Dior have all increased their prices in 2020, and a spike is looming on the horizon next year.
The largest impact Trump has had on fashion? His beef with Chinese President Xi Jiping, leading to the early stages of what many believe to be an full-blown trade war. Tariff raises on raw materials like cotton cost China 2 billion in 2019, leading to increased prices for U.S. consumers.
While many are calling for America to stop relying on China to improve the economy, activists are calling for fashion to abandon its workplaces there after controversy surrounds the government’s treatment of Uyghur Muslims.
So far, Biden has been relatively mum on China. He’s called Jiping a “thug,” in the past but hasn’t spoken much about any economic restrictions planned if he assumes office. It’s important to note the current president’s escalations have altered the U.S.–China relationship, and it remains unclear as to how much more harsh or lenient the Democratic nominee plans if victorious on election night.
The former Vice President does have his mind made up on one aspect though: increasing the corporate tax rate. A proposed 7% increase from 21% to 28% doesn’t seem like it’ll make American retail giants and designers happy, but at least they collaborated with the Biden-Harris webstore earlier this fall for campaign merchandise.
In an increasingly polarized political outlook between two candidates not everyone is happy with, fashion’s economic future remains uncertain. Strained supply chains due to the pandemic might buckle even further under the weight of the somewhat crumbling American political experiment.
When broken down, both Trump and Biden’s stance on massive Chinese tariffs and their respective parties’ thirst for unrest on the streets aren’t so different. Echoing what many younger political activists may think, it’s more of the same thing.
In an editorial, Luxury analyst Erwan Rambourg argues that nothing really changes after Nov. 3 for the luxury landscape.
“Given the amount of wealth in the US, the underdeveloped nature of the luxury market relative to that wealth and the recent shift towards a mentality that says it’s appropriate to reward oneself,” argues luxury anylist Erwan Rambourg. “It’s clear to me that, taking a long view, America’s luxury market has good days ahead.”
So, although you don’t have you clutch your pearls too tightly on Tuesday night, maybe buy that new leather clutch you were eying the other day. Who knows if impending civil doom will shut down Fifth Avenue, much less the luxury world.END
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