Anti-American sentiments could be another roadblock for retailers as they navigate a litany of issues in the aftermath of Trump’s tariffs.
“We haven’t heard of any backlash yet for the companies we follow, but this is something we are watching closely given rising geopolitical tensions,” particularly between the US and China, Bank of America analyst Lorraine Hutchinson wrote in a note.
That spells bad news for US brands with the most Chinese sales exposure, including Nike (NKE), Skechers (SKX), Coach owner Tapestry (TPR), and Ralph Lauren (RL).
On Wednesday afternoon, President Trump authorized a 90-day pause on most reciprocal tariffs while keeping the 10% across-the-board duty. But China now faces a 145% tariff because of “the lack of respect that China has shown,” Trump said on Truth Social.
Forrester retail industry analyst Sucharita Kodali told Yahoo Finance that consumer pushback in other regions will likely be limited in impact, but China remains the big question mark.
“It’s less like Europe or Canada,” she said. “I do think [China is] a permanent rupture that I’m not sure is going to be fixed anytime soon … I don’t know the future of American companies in China,” she said. The country has instituted an 84% tariff on American goods in response.
US brands have already been struggling in China amid aggressive local competition and flagging domestic economy.
As of the latest quarter, Nike sold $1.73 billion of goods in Greater China, a 17% drop from the previous year. It sold $4.86 billion in North America.
“Nike is in a really, really tough spot. They’re in a turnaround for a whole host of reasons. China is just one of their problems,” Kodali said.
CEO Elliott Hill told investors it remains “committed to China.”
“We see the long-term opportunity there. There’s 1.3 billion consumers … We’ve also made some significant investments in China, whether it’s around some of the big teams like the national basketball team, the track and field team, and the football team,” he said.
Per Hutchinson, “Nike saw the most pronounced impact in China from right-sizing inventory to reflect a challenging macro and promo environment. Localized product and innovation are cutting through this tough backdrop but aren’t enough to offset the pressure.”
Skechers reported $333.5 million of revenue in China last quarter, down 11% year over year.
Skechers CFO John Vandemore told investors “China was the drag” on its international business.
“China continues to be the challenge that, in its size and scale, gives it a disproportionate impact, particularly in the Asia Pacific region.” Vandemore said the team is “working very diligently to address what they can in the market.”
The company plans to stay the course, saying its business “ultimately will be a very good fit with that market.”
Tapestry reported growth in its Greater China business last quarter. Its revenue of $272.8 million is up 3% compared to last year.
“We delivered low-single-digit growth in the quarter, significantly outpacing the industry,” CEO Joanne Crevoiserat told Yahoo Finance, citing that innovation and value led shoppers to the brand.
While it might have been a slight uptick, CFRA analyst Zach Warring said in a note, “We now see very little upside potential in China as one of the world’s largest economies continues to struggle.” The country makes up 15% of Tapestry’s total sales, compared to North America‘s 65%.
Ralph Lauren recently saw its China revenue grow 20% year over year, driven by same-store sales growth, new customers, and “key marketing moments,” CFO Justin Picicci told investors.
As these retailers look to hold down their business in China, they also face a changing consumer environment in the US and an ever-changing backdrop of how much these tariffs actually are.
“Companies are hesitant to take price really quickly … I haven’t seen any brand take price yet, and I think it’s because they don’t want to walk back,” William Blair analyst Sharon Zackfia told Yahoo Finance.
Tariffs have already caused US consumers to be more pessimistic about the economy, which could prompt them to pull back on spending. According to the Conference Board’s consumer confidence index out in late March, US consumers’ expectations about the economy dropped to a 12-year low.
PwC US consumer markets adviser Ali Furman told Yahoo Finance last week, “Lower-end consumers who are already under a lot of pressure, they’re probably getting more anxious and even more cost-conscious, because they’re afraid that prices are going to go up and they’re already struggling to afford necessities.”
“Forget about discretionary,” she added, as average consumers become more discerning, making choices between purchasing apparel, consumer electronics, home decor, or dining out.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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