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You can still buy shares in retailers even as Trump the Tariff Man lurks.
But be choosy.
“We’re focusing on tariffs too much,” BMO Capital Markets retail analyst Simeon Siegel said to Yahoo Finance Executive Editor Brian Sozzi during an episode of the Opening Bid podcast (see video above or listen below.) “From a pure business perspective, a tariff is just a cost input going up.”
Siegel covered retail during the first Trump administration, when tariffs impacted several industries, including the medical, solar, and steel industries.
This time around, the Trump administration has proposed tariffs of 25% on goods from Mexico and Canada and 10% tariffs on Chinese goods. In theory, these tariffs will substantially impact retail goods that are manufactured in these countries.
For now, tariffs on Mexico and Canada are delayed. But they kicked in for China this week.
Read more: What are tariffs, and how do they affect you?
Tariffs have sent retail execs at Gap (GAP), Polo Ralph Lauren (RL), Williams Sonoma (WSM), and others to move sourcing out of China to contain costs.
"It's a pressure point. But again, I think we can work through it, and we can manage it. I think we've lived with tariffs already. It's not a new concept and we've been able to navigate it," Ralph Lauren CEO Patrice Louvet told Sozzi at the World Economic Forum in late January.
Retail execs acknowledge that prices will have to go up to compensate for the added supply chain costs and the tariff itself.
Watch: How Gap's CEO is managing tariffs
Siegel thinks scale is important in this volatile backdrop, which has him more optimistic about Nike (NKE), especially as new management drives a turnaround.
Nike has interests in China, both in the manufacturing and consumption of its goods arenas. Nike has been in China since the 1970s and weathered plenty of storms, including the last round of Trump tariffs.
Siegel doesn’t necessarily foresee tariffs as the true problem for Nike to solve this year. Rather, it has an in-house issue that needs addressing.
“There’s the perception that Nike was losing out market share to [competitors],” he said. “What was happening though [was] they were losing mindshare.”
Adding that Nike was losing its luster in the “newness” category, Siegel said too much reliance on classics, a la the Michael Jordan brand, made sense at first. But “in recent years, Nike [was] without competition, without innovation of their own, but a competitive set that was showing innovation.”
