Donald Trump, Xi Jinping. President Donald Trump, right, with China's President Xi Jinping, left, during their bilateral meeting at the G20 Summit, in Buenos Aires, ArgentinaTrump G20 Summit, Buenos Aires, Argentina - 01 Dec 2018

The U.S. and China might well be nearing a trade deal that could see both sides lift tariffs.

But while this would appear to be good news for retailers, it certainly wasn’t reflected in their stock prices Monday, with investors wary over whether it will actually materialize.

The Dow Jones Industrial Average closed down 206 points, or 0.8 percent, to 25,819.65. At one point during the day it was down as much as 400 points.

Among the retailers finishing the day in the red were Gap Inc., down 6 percent to $27.74.; Abercrombie & Fitch Co., 3.9 percent to $21.59; Guess Inc., 3 percent to $22.31; Nordstrom Inc., 2.8 percent to $45.87, and PVH Corp., 2.6 percent $112.10.

Several media reports suggested Monday that the two sides were in final-stage talks and a deal would likely involve China cutting tariffs and easing foreign ownership rules, among other things. In return, the U.S. would also lift tariffs.

The timing of such a deal is understood to be toward the end of the month. The deadline for talks was meant to be last Friday, but President Trump said last week that it would be extended until he meets with China’s President Xi Jinping — although a precise date is yet to be made public.

Andrew Hunter, senior U.S. economist at Capital Economics, said: “Admittedly, these reports are so far unconfirmed. It’s also possible that talks hit a late snag, particularly if domestic criticism that Trump is backing down too easily gains traction. For now, however, Trump is clearly pushing for a deal and, assuming that a summit with China’s President Xi is announced over the coming weeks, we doubt Trump would be willing to walk away empty-handed.”

Retailers selling handbags are certainly hoping for a positive resolution. While the rest of the fashion sector escaped relatively unscathed in the tit-for-tat trade war that dominated 2018, handbags were not so lucky.

Alongside a raft of other consumer-facing goods, totaling $200 billion in imports, handbags were hit with 10 percent levies last year. That was set to rise to 25 percent on Jan. 1, but the U.S. halted those plans as part of the negotiations.

But if the talks fail, the Trump administration has said that tariffs would rise after all. That would also mean that additional levies on a further $267 billion of goods — something Trump has threatened — would become much more likely. If that happens, the total amount of tariffs would surpass the value of all Chinese imports the U.S. accepted in 2017.