Goldman says these retailers are the most exposed to potential Trump tariffs

Companies that buy the largest share of their goods from China could be damaged the most by plans to raise tariffs under another Trump presidency, according to Goldman Sachs. With the in-person U.S. election voting set for Tuesday, trade and tariff policy remain a key focus for investors. Former President Donald Trump has said he intends enact universal tariffs as a key economic policy tool should he win office again, including a 20% levy on all imported goods and a 60% tariff on products made in China. Against that backdrop, Goldman Sachs released a list of American retailers that could be most impaired under a Trump presidency, due to the amounts of imported goods sourced from China. Here are some of the stocks on that cropped up on Goldman’s screen: Plus-size apparel retailer Torrid , down 42% this year, was one name in the basket. About 95% of Torrid’s current sales come from the U.S. However, the retailer has high dependence on Chinese imports, high product elasticity and scores low on its ability to pass higher costs onto consumers. “53% of goods were sourced from China as of FY23, though the company is targeting mid-teens by FY24,” wrote Goldman Sachs analyst Brooke Roach. Three of the five analysts covering the stock hold a neutral view. The average price target implies that shares of Torrid could rally nearly 85%. Electronics seller Best Buy could also take a hit from Trump’s proposed tariffs, since the company currently sources around 60% of its goods from China, Roach said. The company is highly dependent on Chinese imports, has high product elasticity and scores a medium on its ability to pass higher costs onto consumers. Most analysts covering the name are neutral, although the average price target is approximately 12% above Best Buy’s current price. Shares of Best Buy have climbed 19% this year. RH , a retailer of upscale home furniture once kn own as Restoration Hardware, has seen its stock advance 12% this year. The company is high dependent on Chinese imports and high product elasticity. However, RH also has a greater ability to pass increased costs onto its higher-income shoppers. 66% of the company’s goods are sourced from Asia, Roach wrote, with 22% from China, 30% from Vietnam and the rest from Indonesia and India. Analysts are generally neutral on RH, with the average price target only 2% above where shares are currently trading. Shares of Floor and Decor have slipped almost 3% in 2024. Approximately 23.5% of the flooring retailer’s products are produced in China, making the company highly dependent on Chinese imports. Floor and Decor also has a high product elasticity and low ability to pass on costs. However, Roach added that recent news from Floor and Decor seemed to indicate that the company is on the right path to mitigate effects from any potential tariffs. “In hardlines, we note updated information from Floor and Decor (FND), which has meaningfully reduced their exposure to China since the last round of tariffs and noted on their last earnings call on 10/30 that they are making good progress in bringing this down and as a direct importer, they are at an advantage versus competitors that use brokers,” she wrote. Analysts are also generally neutral on this stock, with the average price target indicating potential 3% downside over the next 12 months. Finally, Roach highlighted household products retailer Sharkninja and drinkware manufacturer Yeti as two other names that could be impaired by tariff increases. However, both companies are implementing promising plans to diversify their sourcing. “SN spoke on their 3Q24 call (10/31/24) regarding their decision to accelerate their supply chain diversification outside of China, driving higher near-term [selling, general and administrative spending]. YETI also quantified its China sourcing on its 2Q24 earnings call, where they also highlighted near-term diversification efforts,” she wrote. “Net, both companies are looking to materially reduce their reliance on China manufacturing by the end of 2025.” Shares of Sharkninja and Yeti are respectively 77% higher and 28% lower in 2024.