The escalating trade tensions between the United States and China move from the bargaining table to corporate financial statements in the week ahead.
More than a dozen American retailers are due to report their latest financial results this week, including giants Home Depot, Lowe’s and Target. The list also includes auto parts stores, clothing retailers and shoe stores. All of them are vulnerable to the rising tariffs traded between the U.S. and China.
President Donald Trump may insist China pays for the American tariffs, but any financial cost gets passed on to U.S. companies and ultimately to their customers. For companies selling a lot of “Made in China” items like Best Buy, Foot Locker and Kohl’s, that eventually is going to mean higher prices. As those companies release their quarterly financials in the week ahead, investors will be listening for hints regarding how the trade war will impact business.
The latest round of tariffs pushed up America’s import tax to 25 percent on scores of Chinese made goods such as clothing and handbags. That was quickly matched by the president’s threat to expand the list of items taxed to just about every China import to the U.S.
Of course, China countered with its own tax on American imports, which will cost U.S. companies, workers and investors in other ways.
Already, retailers Walmart and Macy’s have warned separately about the impact of these new tariffs. The stores told their investors last week they will lead to higher prices and Macy's warned future tariffs could impact its financial forecast.
Retail stocks have had a difficult time. The S&P Retail exchange traded fund fell twice as much as the S&P 500 stock index as the U.S. and China traded this latest round of tariff increases.
Unemployment may be historically low, and consumer confidence high, but American shoppers are frugal.
Tom Hudson hosts “The Sunshine Economy” on WLRN-FM, where he is the vice president of news. Twitter: @HudsonsView