Retail stocks surge after tariffs for clothing, footwear delayed

  • Shares of retailers jumped Tuesday after the United States Trade Representative announced it was delaying proposed tariffs on clothing, footwear and a number of other items.
  • Stocks including Guess, Abercrombie, American Eagle, and Chico’s, which were all up 8% or more following the news.

Shares of retailers jumped Tuesday after the United States Trade Representative announced it was delaying proposed tariffson clothing, footwear and a number of other items until Dec. 15.

Stocks including Guess, Abercrombie, American Eagle, and Chico’s were all up 5% or more following the news.

Department store stocks such as Macy’s and Nordstrom also rose more than 3%. Ahead of the announcement, both Macy’s and Nordstrom had both hit 52-week lows in trading. Shares of big-box retailers Targetand Walmart rose 5% and 2%, respectively.

The S&P Retail ETF (XRT) was up more than 3%, putting it on pace for its best day of the year.

Additional tariffs were expected to impact a range of consumer goods effective Sept. 1, just as retailers are gearing up for the busy holiday season. President Donald Trumpannounced last month that he would ratchet up the trade war with China and impose 10% tariffs on an additional $300 billion worth of Chinese goods.

“Although we are waiting for further details, we are pleased the administration will delay tariffs on certain consumer products,” said David French, senior vice president of the National Retail Federation, an industry trade group. “Clearly, the administration understands the importance of avoiding higher taxes on American families during the holiday season. Still, continued uncertainty for U.S. businesses and consumers is a drag on the economy. What we really need is an effective strategy to address China’s unfair trade practices by working with our allies instead of using unilateral tariffs that cost American jobs and hurt consumers.” 

Retailers facing tariffs often manage by raising prices on consumers, or taking a hit on profits. In particular, department stores have been struggling of late to grow sales. In August, Barney’s filed for bankruptcy while J.C. Penney announced it was at risk of being delisted from the New York Stock Exchange because its shares had been trading too low.

Macy’s, Target, and Walmart declined to comment to CNBC.


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