Wall Street continued to lose ground on Tuesday as President Donald Trump ratcheted up his trade war with Canada — bringing fashion and retail stocks along for the ride.
Some big retailers were caught up in their own affairs as well as the market selloff.
Kohl’s Corp. led the industry down, falling 24.1 percent to $9.15 after issuing a weak outlook for 2025. And Dick’s Sporting Goods Inc. projected its comparable sales growth would slow to 1 to 3 percent this year from 5.2 percent last year and saw its stock drop 5.7 percent to $198.97.
But many other companies seemed to simply get caught up in worries over consumer confidence, a sales slowdown in February and a wave of uncertainty around exactly what Trump will do next and whether it might lead to a recession.
The decliners included Guess Inc., down 9.6 percent to $10.19; Mytheresa, 6.8 percent to $8.83; Columbia Sportswear Co., 5.5 percent to $80.52; American Eagle Outfitters Inc., 5 percent to $11.49, and Lululemon Athletica Inc., 4.3 percent to $319.42.
On Tuesday, Trump posted to social media that he would double tariffs on Canadian steel and aluminum to 50 percent after the country levied a 25 percent duty on electricity coming into the U.S.
The tit-for-tat was tinged with a certain yearning for U.S. territorial expansion that the market is still trying to gauge.
“The only thing that makes sense is for Canada to become our cherished Fifty First State. This would make all Tariffs, and everything else, totally disappear,” said Trump, adding “your brilliant anthem, ‘O Canada,’ will continue to play, but now representing a GREAT and POWERFUL STATE within the greatest Nation that the World has ever seen!”
That comes on top of still-brewing trade wars with Mexico and China, while just about any other country could come next.
Along with Trump’s much more assertive approach to executive power and deep cuts to the federal bureaucracy led by Elon Musk, the trade wars have added up to more than a usual dose of uncertainty.
Trump over the weekend declined to rule out a recession as he puts his vision for the country into place.
When asked about a recession by reporters on Air Force One on Sunday, Trump replied: “Who knows? All I know is this: We’re going to take in hundreds of billions of dollars in tariffs, and we’re going to become so rich, you’re not going to know where to spend all that money. I’m telling you, you just watch. We’re going to have jobs. We’re going to have open factories. It’s going to be great.”
That future — if it’s even possible — is going to take some time. In the meanwhile, retailers and investors are mulling over the sluggish first quarter and sentiment is changing fast.
John Kernan, a retail analyst at TD Securities, said in a research note: “We haven’t seen a sector narrative flip like this since COVID[-19] hit in March ‘20,”
Despite the market’s general bearishness — the S&P 500 entered into correction territory and is down 10.3 percent from its February high — Kernan called out some mitigating factors for retail.
“Weather turned and the consumer froze in February — literally and figuratively,” the analyst said.
While Kernan acknowledged that’s hard to explain after such a strong holiday season, he pointed out that February is a small month for retail and that spring weather, Easter and tax refunds will help.
“Inventory levels are in good condition vs. top-line trends if data improves into April,” he said. “We see significant deflation in cotton costs, freight costs, gas prices and diesel costs. Foreign exchange headwinds have lessened over the past 30 days with the euro, British pound, and yen strengthening materially relative to the U.S. dollar.”
But even with Kernan’s admittedly “glass half full” take, there’s no telling what comes next out of Washington.
