(Bloomberg) -- Many retailers face significant risks if President Trump's threat of 25 percent tariffs become reality, according to analysts.
Evercore ISI estimates that raising tariffs to 25 percent “would wipe out retail earnings growth,” while a 10 percent tariff on all Chinese imports could cut growth to 5 percent from 8 percent over the next 12 months.
Renewed tariff rhetoric “could bring a wave of fear back into stocks generally and certain retailers in particular,” analysts led by Greg Melich wrote wrote in a research note Monday. Evercore ISI sees Bed Bath & Beyond Inc., Best Buy Co., Lumber Liquidators Holdings Inc. and Target Corp. as having more risk.
The SPDR S&P Retail exchange-traded fund fell as much as 1.8 percent in its biggest drop since April 22. A fund tracking the S&P 500 fell as much as 1.7 percent, the most since March 22.
UBS and Goldman Sachs see makers of home furnishings as among the most at risk given the category's elevated exposure to China. UBS analyst Michael Lasser sees home improvement, food retailers and auto parts as best positioned and notes that Floor & Decor Holdings Inc. just trimmed its forecasts last week after changing its assumptions about a 25 percent tariff.
Goldman Sachs expects stocks could be volatile as investors had largely stopped talking about potential risks. Big Lots Inc., Dollar Tree Inc. and Five Below Inc. are among the companies that could be affected, analysts led by Christopher Prykull wrote.
Read more: Wall Street Asks Whether Trump's Tariff Is a Tactic. Or Not.
To contact the reporters on this story: Catherine Larkin in Chicago at clarkin4@bloomberg.net;Matt Townsend in New York at mtownsend9@bloomberg.net
To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Will Daley
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