Tags: Mexico | Trump Administration | denim | loser | trade | war | mexico

Denim Could Be Big Loser in a Trade War With Mexico

Denim Could Be Big Loser in a Trade War With Mexico
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Friday, 31 May 2019 04:18 PM

If disappointing earnings weren’t bad enough, retail investors now have to worry about the potential impact of new U.S. duties on all Mexican goods.

“This is unfathomable,” said Rick Helfenbein, president of the American Apparel & Footwear Association, in a statement. “Because of President Trump’s tax increase, Americans will pay more for everything from jeans to cars to computers to machinery.”

The S&P 500 Retailing Index fell 1.4% at 2:41 p.m. in New York, on track to close at its lowest level in more than two months. Retail stocks are poised for a fifth consecutive week of declines as apparel earnings have mostly disappointed. Gap Inc., famous for its denim jeans, was the worst performer Friday after weak results.

“Additional levies on U.S. companies for imports would result in higher inflation hurting consumer spend,” Bloomberg Intelligence senior retail analyst Poonam Goyal said. “That could hurt sales for key denim makers like Levi, American Eagle, Wrangle, and Lee if they manufacture denim there.”

According to trade group, Mexico is the eighth largest supplier of apparel to the U.S. market and seventh largest supplier of footwear. It is the largest supplier of men’s and boy’s jeans to the U.S., accounting for more than a third of imports.

To be sure, retail exposure to Mexico is smaller than China, but food, upholstery products and consumer electronics are also likely to be affected, Telsey Advisory analyst Cristina Fernandez said in an email. Investors also see alcohol makers caught in the cross hairs, as shares of Modelo and Corona owner Constellation Brands Inc. fell the most since January.

© Copyright 2021 Bloomberg News. All rights reserved.


Economy
If disappointing earnings weren't bad enough, retail investors now have to worry about the potential impact of new U.S. duties on all Mexican goods."This is unfathomable," said Rick Helfenbein, president of the American Apparel & Footwear Association, in a statement....
denim, loser, trade, war, mexico
263
2019-18-31
Friday, 31 May 2019 04:18 PM
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