The biggest news this week was, of course, the Presidential election in the U.S., with Donald Trump securing a second term in a defeat against Kamala Harris. Ahead of Trump taking office in January, we take a quick look at what can be expected across an array of major issues – from tariffs and trade to merger-and-acquisitions – under the Trump Administration. (For a dive into what can be expected from a technology regulation perspective, including AI, data privacy, and crypto, you can find that here.)
Ahead of his win, Trump highlighted plans to levy new tariffs on all imports into the U.S., with China expected to see the most significant impact, and to renegotiate a free trade agreement with Mexico and Canada.
> China: A recent note from Holland & Knight states that when it comes to China, Trump plans to “revoke China’s Most Favored Nation trade status, attain economic independence from China, and prevent China from buying American real estate.”
> Mexico and Canada: The President-Elect has said that he will formally notify Mexico and Canada of his intention to utilize the six-year renegotiating provision of the United States-Mexico-Canada Agreement (“USMCA”) to reach a better deal. “Chinese manufacturing in Mexico to circumvent the Trump/Biden tariffs will be a likely part of the trade renegotiation,” per CNBC.
> Tariffs: On the topic of tariffs, Trump has said he will increase tariffs on all goods coming foreign countries. Specifically, he has said that he will levy across-the-board tariffs of 10 to 20 percent on all imports arriving into the U.S. and a 60 to 100 percent tariff on Chinese imports. “He is not a fan of large, multilateral trade deals,” per Holland & Knight. “So, it is reasonable to expect a return to bilateral trade agreements, including a review of the Korean-U.S. Trade Agreement (KORUS) and the USMCA, among others, in a second term.”
The immediate effect here is rising calls for “frontloading from all around the globe,” Paul Brashier, vice president of global supply chain for ITS Logistics, said, noting that companies from retail to manufacturing are moving quickly to get imports into the U.S. ahead of schedule.
As for a couple of fashion industry-specific responses, the American Apparel and Footwear Association is speaking out against impending tariffs, saying, “Tariff policy under the new Administration will indeed be a challenge and will trigger new inflationary cycles if campaign proposals are fully enacted, making it more expensive for Americans to get dressed every day … Tariffs are taxes paid by U.S.-based businesses and American consumers, not on China or other supplier countries. These tariffs disproportionately harm lower income American consumers and female consumers with higher tariffs on lower priced products and on women’s clothes and shoes.”
Meanwhile, Rachel Kibbe, founder and CEO of the American Circular Textiles coalition, said, in part, that “while the federal headwinds pose a challenge for policies rooted in pure climate-related objectives, Trump’s agenda also presents real opportunities for U.S. manufacturing through domestic circular textile policy. To balance the inevitable rise in cost of imported goods to American consumers, there is also an opportunity to support domestic jobs, reduce our dependence on foreign supply chains while improving national security, and enhance our global competitiveness.”
Questions have arisen about how Trump will handle the Federal Trade Commission (“FTC”)’s broad ban on most non-compete clauses, with experts stating that the president-to-be may look to reverse the rule. Brown Goldstein Greg Care outlines three potential scenarios: (1) under new leadership, the FTC might drop its legal fight to save the non-compete rule from federal court decisions declaring it invalid; (2) regardless of what becomes of the court battles, the FTC could seek to amend or repeal the non-compete rule; and (3) the non-compete rule might be subject to nullification by Congress.
Given Trump “did not make noncompetition provisions a centerpiece of his campaign or message to voters,” BakerHostetler Daryl Leon notes that major changes to the restrictive covenant landscape “seem much more likely to come from the states or even cities around the country, rather than from presidential decree.”
Legal and finance experts, alike, expect that a Trump presidency will be a boon for deal-making. The Biden administration has been “cracking down on deals viewed as having the potential to concentrate corporate power and limit consumer choice,” Bloomberg noted recently, pointing to the pattern of FTC chair Lina Khan and Jonathan Kanter, assistant attorney general for the Justice Department’s antitrust division, “testing out new approaches that have made it hard to predict how deals will be received.” (This includes a very narrow definition of the relevant market, i.e., the “accessible luxury” handbags market, in furtherance of an effort to block the merger of fashion groups Tapestry and Capri Holdings.)
Trump appointees at federal agencies are likely to bring “a friendlier approach to M&A,” prompting more deal activity in the industrial, consumer retail, and energy sectors, according to Skadden’s Ann Beth Stebbins.
Lacoste is testing Vrai AI, an AI-powered anti-counterfeiting technology from French tech co. Cypheme. The AI-powered program enables companies to “examine microscopic details of specific product features,” such as Lacoste’s famous crocodile logo, allowing them to differentiate between authentic goods and infringements/counterfeits in “a similar way to a human expert.” According to Cypheme, the Vrai AI technology boasts a 99.7 percent level of accuracy and eliminates the need for specific anti-counterfeiting mechanisms, such as special labels or hidden details.
Lacoste is the first major fashion brand to onboard the technology as part of its trademark enforcement/anti-counterfeiting efforts.
“Implementing anti-counterfeiting technologies helps brands combat piracy, secure operations, enhance revenue and improve customer engagement, however they do not stop at just that, they have a much larger impact, helping shape safer societies overall.”, Cypheme CEO Hugo Garcia-Cotte said.
Manolo Blahnik has opened its first store in China – in Shanghai’s Plaza 66 luxury mall – with an additional five stores planned for the next five years. The luxury footwear company’s expansion into Mainland China is notable, as it follows from a more than 20-year-long trademark battle over its name.
The store openings come just over two years after the Supreme People’s Court of China sided with Manolo in its trademark fight against Chinese businessman Fang Yuzhou, who successfully secured a registration for the “Manolo & Blahnik” trademark for use on footwear in China back in 2000, benefitting from the fact that China issues trademark registrations on a first-to-file (as opposed to a first-to-use) basis. Yuzhou’s registration served to significantly limit the operations of the Manolo Blahnik brand in the Chinese market, despite years of existing operations in other markets and major marketing placement, such as in the HBO series, Sex and the City.
As TFL previously reported, the win for Manolo Blahnik, which came by way of a June 2022 decision from the Supreme People’s Court of China that invalidates Yuzhou’s registration, paves the way for the 50-year-old brand to engage in a major expansion effort on the Chinese mainland, as well as in Taipei and Hong Kong.