president donald trump

Add Wall Street investors to the list of losers in the U.S.–China trade war.

The Dow Jones Industrial Average dropped 2.4 percent on Monday, or 617.38 points, to 25,324.99 as China fired back, meeting President Donald Trump’s tariff challenge by adding 25 percent duties to $60 billion in U.S. imports. Last week, Trump boosted tariffs on $200 billion in Chinese-made goods to 25 percent.

Fashion and luxury shares worldwide didn’t escape the market’s jitters. Among the biggest decliners in the U.S. market on Monday were Signet Jewelers, down 11.9 percent to $20.16; G-III Apparel Group, 9.4 percent to $34.02; Canada Goose Holdings, 7.3 percent to $47.48; Tiffany & Co., 6.8 percent to $97.68; Gap Inc., 6.6 percent to $22.74, and Tapestry Inc., 6.3 percent to $30.22.

European fashion houses were also losers with declines at Brunello Cucinelli, down 3.5 percent to 29.80 euros; Kering, 3.2 percent to 491 euros; LVMH Moët Hennessy Louis Vuitton, 2.9 percent to 323.75 euros, and Burberry Group, 2.8 percent to 18.67 pounds.

The global nature of the sell-off suggests that investors, who had fingers crossed that the trade war would end before it really began, are starting to look to the broader economic ramifications.

So far, most of the damage could be undone.

Trump’s latest tariff hike impacts goods that left China starting Friday, giving the two sides a chance to reverse course as the cargo ships cross the Pacific. And China’s new levies don’t take hold until June — which could coincide with the next time the leaders of the two sides in the trade war are due to meet. Trump said over the weekend that he would meet with China’s President Xi Jinping at the G20 Summit in Tokyo next month.

“There’s still another month or so; they could reach a deal and sort of undo this without any really significant harm,” said Scott Hoyt, senior director of consumer economics at Moody’s Analytics. “Or this could be the shot that starts the trade war” in earnest.

But if the 25 percent tariffs extend to all of China’s goods, a step the Trump administration is preparing, and if duties on auto imports from elsewhere also rise, as the president has threatened, the pain could be inescapable.

“Then you’re talking about the kind of shock to the economy that would threaten us with a recession,” Hoyt said.

If the higher tariffs in the U.S. and China stick, Hoyt said U.S. consumers will ultimately have to pay higher prices while companies that sell into China pull back, hurting job growth.

“There’s really nothing good out of this for consumers until and unless an agreement is reached,” Hoyt said.

Right now, it seems like the same is true for the stock market.

Companies waiting in the wings to go public could also find their wait is longer than they would have liked.

Already, Revolve has been on the sidelines since the fall and others are contemplating an offering, such as J. Crew Group’s Madewell division. Rent the Runway could also make its move.

But if the markets are in turmoil, they’re much less inviting.

“We believe that China trade-related volatility, if it continues, will slow down IPO market activity,” said Kathleen Smith, Renaissance Capital, manager of IPO ETFs.

And that comes on top of the newfound skepticism around some of the techier stocks after the lackluster Lyft and Uber IPOs. “We expect IPO investors will be much more cautious about what they pay for IPOs of highly valued, money-losing unicorns,” Smith said.

If the turmoil leads to a sustained stock drop, it could also hurt consumer psychology and prompt businesses to be more cautious.

“The wealth effect comes in,” said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University. “People’s portfolios take a hit, so they’re liable to spend a little bit less down the road.

“Corporations will decide they don’t have to do that much cap-ex spending,” he said. “It’s future growth that gets affected.”

Dhawan predicted the tariffs “are here to stay for a long time” — it’s just the level that needs to be determined. “This is a game,” he said. “It’s an economic competitiveness game and both sides are putting out their players.”

But much of the impact of the trade war remains theoretical — and up for debate.

The Trump administration’s move toward higher tariffs on all of the imports from China, including apparel, raised alarm bells in the industry.

“This is a self-inflicted wound that will be catastrophic for the nation’s economy,” said Rick Helfenbein, president and chief executive officer of the American Apparel & Footwear Association. “By tightening the noose and pulling more consumer items into the trade war, the president has shown that he is not concerned with raising taxes on American families, or threatening millions of American jobs that are dependent on global value chains.”

However, forecaster Craig Johnson, president of Customer Growth Partners, put the impact of the U.S. tariffs instituted so far at $564 per household annually, which could reduce total retail sales by 0.9 percentage points.

Johnson said fashion brands have already been moving away from producing in China and that consumers could rally to U.S.-made goods.

“Rather than this being a real hit to consumers, we think the American consumer is going to rise up and, if necessary, strap the rest of the economy on its back and charge ahead,” Johnson said.

Certainly, that’s a belief that would be applauded by Trump, who has pushed his position hard and nearly narrated the geopolitical back-and-forth on Twitter.

Trump has said the trade war works for the U.S. because it fills the Treasury with billions from tariffs. But those payments to bring goods across the border are made by companies that will eventually boost prices for consumers to compensate.

Still, the president is emphasizing the long term.

“There is no reason for the U.S. consumer to pay the tariffs, which take effect on China today,” he tweeted Monday morning, adding, “the tariffs can be…completely avoided if you [buy] from a non-tariffed country, or you buy the product inside the USA (the best idea). That’s Zero Tariffs. Many tariffed companies will be leaving China for Vietnam and other such countries in Asia. That’s why China wants to make a deal so badly!”

For apparel companies, that kind of supply chain shift is easier said than done. Although production arrangements are always in flux, big changes — and certainly a return to U.S. product en masse — would take years, while tariffs could start to have serious bite in months. Leading retailers like Walmart have been pushing Made in the U.S.A. programs ever since the Obama administration, but they have had little impact on apparel imports, which continue to soar.

Trade with China, though, is almost a sacred issue to Trump, who has long argued that the U.S. is being taken advantage of, even as he tries to stay on good terms with President Xi.

“I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries,” Trump tweeted. “Too expensive to buy in China. You had a great deal, almost completed, & you backed out!”

On the other side, China’s Vice Premier Liu He earlier said it was irresponsible to casually accuse one party of backtracking, while the two sides are still in the process of negotiation, according to Xinhua, the country’s official news service.

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