President Donald Trump prepares to slap new tariffs
Investors are bracing for signs of pressure on U.S.
consumers as top retailers begin reporting quarterly results next
week and key consumer sentiment and retail sales data is released.
Trump’s planned 10% tariff on the remaining $300
billion in Chinese imports, which will largely affect consumer goods,
unlike the previous round that fell heavily on industrial and
business products. That could be a double-whammy for the U.S.
economy, which is about 70 percent driven by consumers, and
retailers.
The S&P Retail index .SPXRT fell a total of 5.3% in
the first three trading sessions following Trump’s Aug. 1 tariff
announcement. As of Thursday’s market close, the index was down
1.6% for the month so far.
Morgan Stanley has estimated that 25% tariffs would lead
to a global recession.
Retailers will have the dilemma of deciding whether to
pass the tariffs on to consumers in the form of higher prices or
absorb the higher costs, which would reduce profit margins.
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