German retailers and the Trump card
Perhaps they will appear better to unemployed steelworkers in the Rust Belt if they seriously believe that a billionaire businessman, happy to use cheap labour and Chinese steel, is really their best friend.
But times certainly look good for middle-aged men with arresting hairstyles.
As the media debate 'Trumponomics' and the moods of the man the world's most powerful nation intends to entrust with the nuclear attack code, may we ask whether president-elect Donald Trump will be good or bad for German retailers?
Well, it all depends on which side of the pond you are sitting.
Cuts in personal income tax will certainly increase the disposable income of US shoppers, which will benefit Aldi and Lidl, but far less so, if these are skewed towards wealthier Americans.
Currently, Trump's populist ire is directed against international free trade deals such as NAFTA and the Trans-Pacific Partnership (TPP). If his campaign rhetoric is to be believed, the former will be ripped up and the latter renegotiated. Protectionist tariffs of 25 viz. 45 per cent will be imposed on goods from Mexico and China.
TTIP – dead in the waterAlthough the Transatlantic Trade and Investment Partnership (TTIP) with the EU, which Trump sees as a "job-killer", already looks dead in the water, there is no mention yet of Europe.
However, a knowing comment by European Commission President Jean-Claude Juncker ("In the coming months we shall get to know Donald Trump, and he will get to know us") doesn't bode well for good trade relations.
Bill Bishop, 'chief architect' at trade consultancy Bricks Meet Click, points out that "most retail legislation in the US is at state or even local level". But, if we accept his estimate that around 85 per cent of the lines in Aldi's US assortment are own label and that 25 per cent of these aren't made in America, the company could be obliged to find local alternatives for nearly one in four of its products.
On the other side of the Atlantic, German food manufacturers, half of whose sales come from international exports, haven't had to take a currency hit yet. Contrary to expectations, US stock markets have hit new highs and the dollar has gained strength since outsider Trump's surprise election victory. Suppliers would be ill-advised, however, not to expect turbulence in the euro-dollar exchange rate over the coming months.
Big Buddy, Uncle VladAt all events, things are looking good at last for retail investors in Russia, including German Cash & Carry giant Metro and hypermarket operator Globus, who have had to endure both a western trade embargo and a weak rouble.
The Donald's penchant for colourful friendships could help the US to hit the reset button with Russia where Obama tried and failed. In God we trust.
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