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Analyst Warns Investors To 'Stay On The Defensive Side' For Chinese Stocks As Trump's Tariff Fears Mount: Nio, Xpeng, Alibaba, JD In Focus

AInvestFriday, Jan 3, 2025 4:18 am ET
2min read


As the US Presidential election draws to a close, investors are bracing for potential changes in trade policy under the incoming administration. President-elect Trump has made numerous tariff threats, leaving analysts and investors wondering which, if any, he'll follow through on. UBS Global Wealth Management has issued a warning to investors, advising them to "stay on the defensive side" when it comes to Chinese stocks. This comes as market volatility is expected to rise due to anticipated policy changes by the new administration.

Trump's proposed tariffs could have a significant impact on the export revenues of Chinese companies. Here's how:

1. Nio and Xpeng: As electric vehicle (EV) manufacturers, Nio and Xpeng rely heavily on exports to the US. If Trump imposes a 10% to 20% tariff on all imports, it could make their products more expensive for US consumers, potentially reducing demand and thus export revenues. For instance, in December 2024, Xpeng delivered over 190,000 vehicles, with a significant increase in Smart EV deliveries. A tariff could impact these numbers negatively. Similarly, Nio's Onvo model breached the 10,000 monthly delivery milestone in December 2024, which could also be affected by a tariff.
2. Alibaba: As an e-commerce giant, Alibaba's export revenues could be impacted by Trump's tariffs. Alibaba's platforms, such as Tmall and AliExpress, facilitate international trade. If Trump imposes a 60% tariff on China products, it could increase the cost of goods for US consumers, potentially reducing demand for products sold on Alibaba's platforms. For example, Alibaba's revenue growth in 2024 was 0.039, and a tariff could slow down this growth.
3. JD: JD is another major e-commerce player in China, and its export revenues could also be affected by Trump's tariffs. JD's platforms, such as JD.com and JD Worldwide, facilitate international trade. If Trump imposes a 60% tariff on China products, it could increase the cost of goods for US consumers, potentially reducing demand for products sold on JD's platforms. For instance, JD's revenue in 2023 was 30.68 billion, and a tariff could impact this revenue negatively.



In addition to the potential impact on export revenues, Trump's tariffs could also disrupt the supply chains of these companies. Increased tariffs mean increased costs for importing and exporting goods, which could lead to reduced efficiency in supply chains. This could result in longer lead times, increased inventory levels, and potential stockouts. For example, Alibaba's vast e-commerce platform relies on numerous international partners, and increased tariffs could lead to higher operational costs. Similarly, Xpeng, an electric vehicle manufacturer, may face increased costs for importing components and exporting vehicles.

To adapt to these challenges, companies like Alibaba and Xpeng could consider the following strategies:

1. Diversify Supply Chains: Companies can reduce their reliance on a single market or region by diversifying their supply chains. This could involve sourcing components from multiple countries or regions, or even producing them in-house.
2. Invest in Technology and Automation: Companies can invest in technology and automation to improve the efficiency of their supply chains. This could involve using advanced logistics software, automated warehouses, or even AI and machine learning to optimize supply chain management.
3. Lobby for Trade Policies: Companies can lobby for trade policies that reduce tariffs and other barriers to trade. This could involve working with industry associations, engaging with policymakers, or even partnering with other companies to advocate for favorable trade policies.

In conclusion, Trump's proposed tariffs could have a significant impact on the export revenues and supply chains of Chinese companies like Nio, Xpeng, Alibaba, and JD. However, these companies can adapt their strategies to mitigate the potential impacts by diversifying their supply chains, investing in technology and automation, and lobbying for favorable trade policies. By doing so, they can maintain their competitiveness in the global market and continue to grow and succeed.
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.