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New Round of Tariffs Push Retail Stocks Further Down

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On Friday, the stocks of retail continued to dwindle further, especially a day since they have tightly sent a new round of tariffs. The administration has implemented the new round swiftly. All this, coming to a close reality from a series of tweets by the President.

On September 1, 2019, Thursday, Trump has earnestly tweeted that America would implement a 10% tariff addition on the excess $300 billion worth of imported goods and products from China.

On most consumer goods and products—such as shoes, electronic devices, appliances, and clothing, among other household products—round three of the tariff implementation has not been implemented. The target now of the new tariff addition is applied to China’s $300 million worth of new products.

 

The Retailers’ Responses

The lobby groups are now speaking for America’s top retailers regarding the whole issue. In the process, investors continue to wait for earnings, but not all of them are affected.

Tim Boyle, Columbia Sportswear Chief Executive Officer, said: “Let’s not tank the economy with the misguided conception that trade wars are fun.”

The U.S. tariffs cause more harm than good. Boyle further added that it is “a disaster for the American economy, employers and consumers.”

For example, Best Buy’s stock shares cut down 11% and fell down further on Friday before regaining positive numbers in the afternoon. Up until the current state, 7% of the total goods of the electronics and appliances retailer is significantly affected by all the tariff.

 

A View From Analysts and Constituents

Once the fourth round of tariffs has taken effect, many analysts chip in with the two cents.

Steve Madden, one of America’s shoe companies, suffered a 9% fallback from its stocks on Thursday. They already feel short of 2.6% the following day. The analysts place their eyes on Maddens stocks, especially since the tariffs would hit the shoes. More so since Piper Jaffray calculated that 94% of Madden’s product manufacturing is made in China.

Almost 70% of all the shoes in the U.S. market come from China according to the Footwear Distributors and Retailers of America.

Hubert Joly, another analyst, said that, “While we understand List 4 as proposed is comprised of many consumer items, including many electronics, we think it is premature to speculate on the impact of further tariffs, as it is unclear whether List 4 will actually be implemented, what products would ultimately be included, at what rate, and when.” 

Department store powerhouses Nordstrom, Kohl’s, and Macy’s received a sharp cut last Thursday but remained stable around Friday. They all have a mix of shoe brands like Ralph Lauren and Nike, making them an easy target for the tariffs, especially since some brands would be at higher costs between retailers and their department stores.

Macy’s has made it clear that they have set strategies and plans in motion. For instance, they would hold prices on products with higher cost while others would increase. Home Depot is likewise implementing this.

 

On the Other Side

Nevertheless, even retailers such as Tapestry and Capri Holdings with little to no imports from Chinese manufactured goods also suffered losses due to the tariffs. Capri fell down 2.7% while Tapestry tempered to a figure less than 1%.

Over the years, retailers have been attempting to diversify their supplies of goods and products straying away from China-made ones. Even so, American has sold Chinese imports more than any other country. In 2018 alone, almost 42% of all U.S. sales on apparel are clothing made from China.

RH, a furniture seller, is one such retailer looking to import outside China. In the inventory, the tariffs only take up about 1% of the sum of inventory receipts for 2019. Their concluded shares and stocks maintained at 2% on Thursday. 

Davin French, senior VP at National Retail Federation, told that “We are disappointed the administration is doubling down on a flawed tariff strategy that is already slowing U.S. economic growth, creating uncertainty and discouraging investment.” He further added that the tariffs from the previous year haven’t worked, and nor does it now.

Hun Quach told in a statement that this is affecting American families adversely, noting that they should not be victims or “pawns” in this China-U.S. trade war.

American Apparel and Footwear Association CEO and President Rick Helfenbein said that Trump’s statements were shocking in all aspects. He further claimed that his tweets only coming from a single meeting with Chinese delegation send them all a lot of concerns about the whole situation

The trade war continues to tighten the expenses and cause many retailers to push for higher costs, which, in turn, forces consumers to pay more for products of the same affordable quality back then. The solution might not seem so clear at the moment, but all will go along with the next steps that each country will take.