US Retail sector faces pressure with the trade dispute amid the US and China

With the increasing tensions between the two countries as a result of the ongoing trade dispute, a sector that is being heavily affected is the retail sector.

In the words of Emanuel Chirico [The owner of both Calvin Klein and Tommy Hilfiger]:

“The volatile and challenging macroeconomic backdrop has continued into the second quarter, with particular softness across the U.S. and China retail landscape”.

This is because the sharemarket is being influenced and can aptly be compared with a see-saw right this moment.

It was due to the drop down of their shares by 14% thereby putting down the stock by 20%.

Trump’s big move towards the dispute was to double the tariffs but this would heavily influence several companies across the country in the negative.

To prevent this from happening, several companies including Nike, Adidas sent the president, Donald Trump, a letter citing their concern towards the doubling of the new tariffs explicitly.

China reacted to Trump by warning them that they could stop the supply of certain exotic materials that are essential. This is because they are important for electric cars and mobile phones.

It was important for them to react with the increased tensions with China’s top smartphone brand, Huawei.

This step taken by Donald Trump has created quite a sticky situation for the retail sector as this was a totally unexpected move for them. Hence, the calculations of their potential returns fall short of the same.

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