Americans just voted in Donald Trump as their next President. He will take oath and move into the White House in a couple of months. But a lot of Americans, people of other countries, and even businesses aren’t quite sure what a Trump presidency might eventually be like.
Jack Ma, who is the CEO and founder of the Chinese e-commerce giant Alibaba (NYSE:BABA), now says that Donald Trump must work with China. Speaking to CNN, Ma said that it could be “disaster” otherwise. Ma says that the world’s two large economies need to have a healthy, positive and trustworthy relationship. There are many problems, but we have to find a way to solve them, he adds.
During the campaign, Republican Donald Trump had repeatedly said that he wants to bring back production to the United States. China is taking away our business, money, and jobs, he argued. If elected, Trump had promised to impose heavy tariff on all Chinese imports. The tariff could be as high as 45 percent. Plus, businesses that outsource to China will also be taxed heavily. Trump had even said that he will name China as a currency manipulator and that too on the very first day of his presidency.
Jack Ma is Optimistic
Ma, who is one of the richest men in China, is however optimistic that Trump will not implement many of the things he said during the campaign. There is always a difference between campaign rhetoric and what you do when you actually get the job.
He points out that there have been others before Trump who has threatened China, but nothing has happened so far. “Every time they talk about it. But I think when they become president when he has that burden… the world is not as simple as he thought”.
The Alibaba founder says, “He’s a smart person, he will adjust”. The relationship between America and China will grow under his presidency.
Alibaba Set to Lose the Most
Chinese businesses have a lot to lose if Trump indeed carries out his promises. It’s going to be bad for Tencent Holdings, Alibaba (NYSE:BABA), Baidu (NASDAQ:BIDU) and the others. But the impact will be the maximum for Alibaba, because the focus of Tencent and Baidu are mostly within the domestic Chinese market, while a significant portion of Alibaba’s business is overseas.
With increased tariff, the sales at the AliExpress site are likely to be much lower. Investors have become skeptical of Alibaba already, as the domestic economy isn’t growing as fast as before.