US-China Trade War, Tariff Hikes Will Wreak Havoc on Retailers

US-China Trade War

The US-China trade war intensified recently. Now, the latest round of tariffs is directly impacting the already challenged retail sector. 

Further, the DOW is down another 400 points and analysts are predicting bleak outcomes in the coming weeks.

US-China Trade War

For the past few quarters, retailers have proven that the retail landscape is changing drastically. Competing with online tellers has forced many brick and mortar operators into administration. Now, the US-China trade war is hurting the already damaged sector because new tariffs will push prices higher and turn shoppers away.

US-China Trade War Tariffs – Third and Fourth Lists

Tariffs on the third and fourth “lists” of goods set out by the Trump administration directly impact the retail sector as consumer goods are hit hard.

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The harsh 25% tariffs already went into effect in May. They affect commodities such as instant coffee along with homewares such as bathrobes.

Further, the fourth list includes all imports from China and so affects common consumer products such as clothes and shoes.

Even major shoe brands Nike (NYSE:NKE) and Adidas (OTCQX:ADDDF) have penned a letter to the Trump administration, detailing the negative effect the tariff hikes will have on their global business.

Both shoemakers are down on the stock market today by 1.09% and 1.29% respectively.

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US-China Trade War – Already damaged

As stated, the retail sector is already suffering. Big retailers such as Sears (OTCMKTS:SHLDQ), JC Penney (NYSE:JCP), Nordstrom (NYSE:JWN) and Kohl’s (NYSE:KSS) have all reported disappointing sales in recent years, with many already facing multiple store closures. The tariffs are likely going to make this problem worse.

Only earlier this week, US retailer Dressbarn announced the closure of all of its 650 stores. Previously, Payless ShoeSource said that it will close all its 2,600 stores by July.

The trade war, of course, affects all areas of business and not just retail. The technology sector is hit particularly hard too, with Adam Crisafulli, executive director at JPMorgan, saying “the trade landscape looks bleaker than ever.”

What are your thoughts on this? Are any of your investments suffering from the US-China trade war?

Featured Image: Deposit Photos/artush

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