Despite some delays, investors realized on Tuesday that U.S. President Donald J. Trump wasn’t bluffing when he threatened to levy new duties as part of his trade policy plan.
The 25 percent tariffs on imports from Canada and Mexico, America’s closest trading partners, went into effect midnight Tuesday. In addition, Trump imposed an additional 10 percent tariff on Chinese imports. The duty rate for China is now at 20 percent. Canada and China reacted with retaliatory tariffs of their own. Mexico hasn’t disclosed its plans, but said that could occur on Sunday.
More from Sourcing Journal
-
Industry Laments 'Potentially Crushing Burden' of Trump's Tariffs
-
BlackRock-MSC Consortium Buys Panama Canal-Adjacent Ports Targeted by Trump
-
Panama AG to Supreme Court: Hutchison Port Deal Unconstitutional
U.S. stocks were a sea of red Tuesday morning in response to Trump’s implementation of tariffs, which set the stage for a global trade war. The Dow Jones Industrial Average slipped 1.5 percent, or 649.67 points, to 43,191.24. Retail and apparel stocks shared in the pain.
Target Corp. on Tuesday posted fourth-quarter earnings in which profits bested Wall Street’s expectations, but then saw first-quarter sales—the retail calendar started in February—off to a slow start. The mass discounter cautioned that it expects year-over-year profit pressure in the first quarter “[i]n light of ongoing consumer uncertainty [that’s] combined with tariff uncertainty.”
Shares of Target were down 2.8 percent, or $3.48, to $120.76 shortly after the markets opened for trading Tuesday. Its mass discounter competitor Walmart Inc. was down 1 percent, or $1.02, to $97.59. The two weren’t the only ones that saw declines.
In the department store channel, shares of Dillard’s fell 5.7 percent, or $22.22, to $366.87, while Macy’s Inc. slipped 2.4 percent, or 34 cents, to $14.01. Kohl’s Corp. was down 0.7 percent, or 8 cents, to $11.33.
Among the specialty retailers, Victoria’s Secret & Co. shares dropped 10.2 percent, or $2.72, to $24.01, while Steve Madden Ltd. was down 7.1 percent, or $2.34, to $30.45. Abercrombie & Fitch Inc. fell 6.1 percent, or $6.28, to $96.71, while its mall competitor American Eagle Outfitters Inc. also was down 6.1 percent, or 80 cents, to $12.29. Gap Inc. fell 5.6 percent, or $1.26, to $21.35. Urban Outfitters was an outlier, as its share rose 1.2 percent, or 67 cents, to $58.86.
Among the brands, Lululemon Athletica Inc. fell 4.9 percent, or $17.80, to $347.81, while Guess Inc. fell 4.7 percent, or 48 cents, to $9.68. Skechers Inc. declined 4.1 percent, or $2.50, to $58.49; Ralph Lauren Corp. shares fell 3.2 percent, or $8.78, to $262.36; VF Corp. decreased 2.4 percent, or 59 cents, to $24.34; Tapestry Inc. slipped 1.6 percent, or $1.33, to $84.09; G-III also was down 1.6 percent, or 42 cents, to $26.65, and Nike Inc. declined 0.8 percent, or 62 cents, to $78.41. Capri Holdings managed to rise 3.9 percent, or 85 cents to $22.83, but those gains were on the heels of rumblings that Prada could be close to a deal to acquire the Versace brand from the Michael Kors parent.