Report: Hardline and softline retailers would be hit hard by trade war with China
The possibility of a China-U.S. trade war would hit some sectors harder than others, and certain retailers would be among the group most impacted.
According to a report by CNBC, both hardline and softline retail stocks have analysts on edge as nearly every name they cover imports goods they sell from China. The report comes on the heels President Trump’s recent threat to raise tariffs on $200 billion worth of Chinese goods from 10% to 25% from 10% and slap new 25% tariffs on $325 billion worth of Chinese goods.
“The new tariff threat could cause softlines stocks to drop 40%,” wrote UBS analyst Jay Sole, who covers TJX Companies, Ross Stores and Burlington Stores. “If 25% tariffs are enacted, it could catalyze further US retail disruption. Many retailers are already struggling. New tariffs, plus the probable accompanying drop in demand, could accelerate the pace of store closures, which is already at a peak.”
The CNBC report cited Goldman Sachs, which said that within its consumer coverage, the most significant category on the $200 billion list is furniture. The firm said that retailers exposed to this category, such as Big Lots, could see a negative impact. Also, fixed price point retailers that import goods from China, such as Dollar Tree and Five Below could also be negatively impacted.
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According to a report by CNBC, both hardline and softline retail stocks have analysts on edge as nearly every name they cover imports goods they sell from China. The report comes on the heels President Trump’s recent threat to raise tariffs on $200 billion worth of Chinese goods from 10% to 25% from 10% and slap new 25% tariffs on $325 billion worth of Chinese goods.
“The new tariff threat could cause softlines stocks to drop 40%,” wrote UBS analyst Jay Sole, who covers TJX Companies, Ross Stores and Burlington Stores. “If 25% tariffs are enacted, it could catalyze further US retail disruption. Many retailers are already struggling. New tariffs, plus the probable accompanying drop in demand, could accelerate the pace of store closures, which is already at a peak.”
The CNBC report cited Goldman Sachs, which said that within its consumer coverage, the most significant category on the $200 billion list is furniture. The firm said that retailers exposed to this category, such as Big Lots, could see a negative impact. Also, fixed price point retailers that import goods from China, such as Dollar Tree and Five Below could also be negatively impacted.
Click here for the full article.