By Ion Jauregui – Analyst, ActivTrades
Trade policy returns to the center of the U.S. economic stage. Donald Trump, in his new electoral program, has reignited his protectionist strategy with proposals for additional tariffs that could exceed 60% on certain products, including footwear, electronics, and manufactured goods imported from China and other regions. This measure, if implemented, will have direct consequences on the business fabric listed on Wall Street and, by extension, on the main stock indices.
Impact on major brands
Companies like Nike (NYSE: NKE), Skechers (NYSE: SKX), and Adidas (ETR: ADSGn), although the latter is listed in Europe, have already expressed their concern. Together with more than 70 other brands, they have asked the administration to exclude footwear from the new tariff package, arguing that adding an extra 145% to the current tariffs — which already range between 20% and 37.5% — would be a direct blow to their profitability and pricing structure, and would slow down their sales forecasts. This fear is not unfounded: both Adidas and Skechers have revised their U.S. sales forecasts downward, anticipating a drop in consumption due to the increased cost of their products.
Repercussions on stock indices
The effects are not limited to companies directly affected. The S&P 500, which includes the 500 largest U.S. companies, covers numerous sectors exposed to imports and international supply chains. An increase in tariffs translates into:
• Reduction of corporate margins in sectors such as discretionary consumption, retail, technology, and automotive.
• Drops in quarterly profits, which could lead to downward revisions in valuations.
• Greater market volatility, since investors usually react cautiously to aggressive protectionist policies.
The Nasdaq 100, with high exposure to tech companies such as Apple (NASDAQ: AAPL) or Tesla (NASDAQ: TSLA), is also in the spotlight. Many of these firms depend on components manufactured in Asia, so a tariff escalation implies higher costs and possible delivery delays, directly affecting their operations.
Meanwhile, the Dow Jones Industrial Average, more concentrated in industrial and consumer sectors, could be affected by pressure on companies such as 3M, Boeing, or Home Depot, especially if domestic demand is impacted by the rising cost of imported goods.
Risks for the corporate economy
The risk goes beyond consumption. Increasing the tariff burden also implies higher operating costs for importing companies, reducing margins, pressuring quarterly profits downward, and in many cases, affecting stock prices. In addition, multinationals that manufacture in Asia could be forced to restructure their supply chains, which would involve unforeseen investments during a global economic slowdown.
Skechers Analysis
The company has been trading lower continuously after a poor start to the first quarter from its highs at the end of January at $78.24, added to the bearish gap caused by Donald Trump's tariff policy. The price is currently supported around the $45.58 level and trading in a middle area around $48.50. Its current upper zone is $56.70 and its lower zone is $42.50. If the price holds during the quarter, we could see a return to the upper part of the indicated range. Otherwise, if the results are as severe as forecasted, Skechers may test the support again and seek a new lower support zone around the current lows of $31.28.
Fiscal and political context
Although employment in the U.S. has shown resilience, with 177,000 new jobs created in April and an unemployment rate of 4.2%, the economic cooling is evident. Trump's proposal includes not only tariffs but also a sharp cut in public spending: $163 billion less, with a 23% reduction in non-defense sectors such as education, healthcare, or research, while the security budget increases by 65%. This fiscal reorientation could cool internal demand and affect GDP growth in the medium term, raising the risk of recession in consumption-sensitive sectors.
Tariff policies are usually poorly received by financial markets due to their distorting effect on prices, international trade, and business confidence. In summary, the new tariff proposals could put downward pressure on U.S. stock indices, especially if the markets price in lower business profitability, increased costs, and a slowdown in consumption. An environment that, far from bringing calm, brings investors back to a more cautious mode.
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The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.
Trade policy returns to the center of the U.S. economic stage. Donald Trump, in his new electoral program, has reignited his protectionist strategy with proposals for additional tariffs that could exceed 60% on certain products, including footwear, electronics, and manufactured goods imported from China and other regions. This measure, if implemented, will have direct consequences on the business fabric listed on Wall Street and, by extension, on the main stock indices.
Impact on major brands
Companies like Nike (NYSE: NKE), Skechers (NYSE: SKX), and Adidas (ETR: ADSGn), although the latter is listed in Europe, have already expressed their concern. Together with more than 70 other brands, they have asked the administration to exclude footwear from the new tariff package, arguing that adding an extra 145% to the current tariffs — which already range between 20% and 37.5% — would be a direct blow to their profitability and pricing structure, and would slow down their sales forecasts. This fear is not unfounded: both Adidas and Skechers have revised their U.S. sales forecasts downward, anticipating a drop in consumption due to the increased cost of their products.
Repercussions on stock indices
The effects are not limited to companies directly affected. The S&P 500, which includes the 500 largest U.S. companies, covers numerous sectors exposed to imports and international supply chains. An increase in tariffs translates into:
• Reduction of corporate margins in sectors such as discretionary consumption, retail, technology, and automotive.
• Drops in quarterly profits, which could lead to downward revisions in valuations.
• Greater market volatility, since investors usually react cautiously to aggressive protectionist policies.
The Nasdaq 100, with high exposure to tech companies such as Apple (NASDAQ: AAPL) or Tesla (NASDAQ: TSLA), is also in the spotlight. Many of these firms depend on components manufactured in Asia, so a tariff escalation implies higher costs and possible delivery delays, directly affecting their operations.
Meanwhile, the Dow Jones Industrial Average, more concentrated in industrial and consumer sectors, could be affected by pressure on companies such as 3M, Boeing, or Home Depot, especially if domestic demand is impacted by the rising cost of imported goods.
Risks for the corporate economy
The risk goes beyond consumption. Increasing the tariff burden also implies higher operating costs for importing companies, reducing margins, pressuring quarterly profits downward, and in many cases, affecting stock prices. In addition, multinationals that manufacture in Asia could be forced to restructure their supply chains, which would involve unforeseen investments during a global economic slowdown.
Skechers Analysis
The company has been trading lower continuously after a poor start to the first quarter from its highs at the end of January at $78.24, added to the bearish gap caused by Donald Trump's tariff policy. The price is currently supported around the $45.58 level and trading in a middle area around $48.50. Its current upper zone is $56.70 and its lower zone is $42.50. If the price holds during the quarter, we could see a return to the upper part of the indicated range. Otherwise, if the results are as severe as forecasted, Skechers may test the support again and seek a new lower support zone around the current lows of $31.28.
Fiscal and political context
Although employment in the U.S. has shown resilience, with 177,000 new jobs created in April and an unemployment rate of 4.2%, the economic cooling is evident. Trump's proposal includes not only tariffs but also a sharp cut in public spending: $163 billion less, with a 23% reduction in non-defense sectors such as education, healthcare, or research, while the security budget increases by 65%. This fiscal reorientation could cool internal demand and affect GDP growth in the medium term, raising the risk of recession in consumption-sensitive sectors.
Tariff policies are usually poorly received by financial markets due to their distorting effect on prices, international trade, and business confidence. In summary, the new tariff proposals could put downward pressure on U.S. stock indices, especially if the markets price in lower business profitability, increased costs, and a slowdown in consumption. An environment that, far from bringing calm, brings investors back to a more cautious mode.
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.