President-elect Donald Trump ‘s tariff plans threaten the outlook for several consumer goods stocks, including a slew of popular apparel and home goods retailers, according to Wolfe Research. Trump’s tariff plans have added to the uncertain sentiment weighing on markets in recent weeks. And the levies could potentially make the Federal Reserve’s job harder this year, as tariffs risk reigniting inflation if the fees are passed on to consumers as higher prices. The president-elect has proposed various scenarios including blanket tariffs of 10% to 20% on all imported goods, a 25% tariff on Mexican and Canadian imports , and surcharges of 60% or more on goods coming from China. As investors wait and see, Wolfe Research honed in on dozens of companies that could potentially be hurt if a 10% universal tariff was imposed or if Trump targets China with a 60% tariff, or both. “With tariffs a key policy tool under a Trump presidency, we highlight our Tariff stock basket,” Wolfe Research chief investment strategist Chris Senyek wrote in a Wednesday note to clients. “We believe that tariff risks are not priced into the stocks generally and we expect the basket to trade on tariff news flow in the coming weeks/months after Trump is inaugurated.” Recent reports say the Trump administration’s economic team is now discussing several ways to gradually unveil higher tariffs month by month, in an effort to create maximum impact while avoiding a spike in inflation, Bloomberg reported on Tuesday, citing people familiar with the matter. One proposal is to release a schedule of tariffs under the International Emergency Economic Powers Act that would increase import duties between 2% and 5% a month on trade partners, Bloomberg said in a separate report . Take a look at the some of the stocks Wolfe thinks could get hit by these plans: Lululemon Athletica , Abercrombie & Fitch and American Eagle Outfitters are among several clothing retailers the firm listed in its tariff stock basket. All three companies raised their fiscal fourth-quarter outlooks on Monday after seeing a strong holiday shopping season . But their shares traded lower, signaling that investors may be growing weary of the retailers’ slowing growth rates. As of Wednesday’s close, Lululemon’s stock is down 4.8% week to date, while Abercrombie’s fell 19.2%. Abercrombie, which also owns the Hollister and Gilly Hicks brands, was hit especially hard this week as Wall Street questions if its rapid growth is nearing an end. Abercrombie expects full-year sales to rise 15%, which is the top of its forecasted range. However, holiday quarter sales will be up 7% to 8%. That is higher than its prior 5% to 7% estimate, but the pace is far below last year’s holiday sales growth of 21%. ANF 1Y mountain Abercrombie & Fitch stock performance. Both retailers are closely watching the impact of tariffs. Abercrombie said in late November that it sources its products from 17 different countries, with about 5% to 6% of its U.S. receipts imported from China, none of its goods come from Canada, and an “immaterial” amount is sourced in Mexico. “We’re following the news just like everybody else,” said Chief Operating Officer Scott Lipesky, on its third-quarter earnings call. “We have an awesome sourcing team. We have great partners globally, and we’ll have a playbook if and when new tariffs come in play at some point in the future.” Lululemon Chief Financial Officer Meghan Frank told analysts on a Dec. 6 call that the company sources about 3% of its goods from China and less than half a percentage from Mexico, and none from Canada. “If tariffs were levied on imports from all countries into the U.S. that would obviously have a more significant impact on our costs,” Frank said. Discount retailers Dollar General and Five Below were also included in the list, alongside Dick’s Sporting Goods . Dollar General and Five Below shares have each tumbled almost 10% so far this year, and Dollar General hit a new 52-week low on Wednesday. Dollar stores are known to be sensitive to tariffs as they have thin profit margins. Five Below’s Chief Operating Officer Kenneth Bull said during the company’s third-quarter earnings call in early December that “work is already underway with our many vendor partners and our overseas sourcing teams to mitigate the impact of potential tariffs.” Pricing is the last lever the company can pull, he said. Construction and engineering equipment manufacturer Caterpillar could also be at risk under Trump’s tariff proposals, Wolfe said. Caterpillar shares are in the green for the year and have gained 6.8% this week, driven by enthusiasm from Evercore ISI’s upgrade of the stock on Monday from underperform to in line.
