Donald Trump has been warmly welcomed back by Wall Street – but fashion remains cautious.
The Dow Jones Industrial Average rose 3.1 percent, or 1,313.92 points, to 43,535.80 on Wednesday morning after Trump beat out his Democratic rival, Vice President Kamala Harris, to return the White House to Republican hands in January. Fashion stocks joined part of that rally. Gainers included Signet Jewelers, up 5.5 percent to $96.70; Capri Holdings, 4.7 percent to $21.49; Lands’ End Inc., 3.8 percent to $16.87, and Macy’s Inc., 3.4 percent to $15.84.
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But the fashion industry was much more muted. Designers often have more liberal social leanings, and they were very much on Team Kamala, donating to her campaign and hanging out in New York with First Lady Jill Biden to get the vote.
Fashion was taking a cautious stance on Wednesday morning.
“The new administration and its policies can have a significant impact on the trajectory of American fashion,” said Steven Kolb, chief executive officer of the Council of Fashion Designers of America. “If the first Trump administration is any indication, there could be changes in trade and tariffs, affecting the cost of imports, which will be felt at the consumer level. Manufacturing and labor policies may also affect production and influence supply chains and the workforce.
“Industry’s climate goals could be challenged with less attention to the environment,” Kolb said. “We must remain adaptable and committed to creativity, diversity and resilience as we support designers in this changing landscape.”
Aside from Trump’s love of tariffs as a sort of overarching tool for managing international relations, the president-elect is seen as more business-friendly, advocating lower taxes and less regulation. But his “America First” agenda and chaotic governing style were causing some indigestion overseas, where investors were anxious to see what would come of Trump’s norm-breaking.
The DAX in Frankfurt fell 1.1 percent to 19,052.06 and the FTSE in Milan fell 1.4 percent to 33,998.29 and the FTSE 100 in London fell 0.1 percent to 8,160.84. In Hong Kong, the Hang Seng fell 2.2 percent to 20,538.38.
During his first term as president, Trump has often taken a confrontational stance on the international stage and has been quick to threaten tariff hikes on goods from other countries, which importers say ultimately increases costs for consumers.
Just before the election, the National Retail Federation said Trump’s tariff proposals could cause American consumers to lose between $46 billion and $78 billion in spending power each year. Among the President-elect’s proposals is a universal tariff of 10 percent to 20 percent on all imports and an additional tariff of 60 percent to 100 percent on goods from China.
For fashion specifically, the NRF estimated that under Trump’s proposed tariffs, consumers would pay $13.9 billion to $24 billion more for clothing.
On Wednesday morning, Matt Shay, chairman and CEO of NRF, tried to drive the point home.
“Effective trade policies will increase America’s competitive advantages in research, development and innovation and protect strategically critical infrastructure while increasing the standard of living and quality of life for all Americans,” said Shay. “However, adopting blanket tariffs on consumer goods and other non-strategic imports is a tax on American families. It will fuel inflation and price rises and lead to job losses.”
Trump has heard that argument before and during his first term he didn’t seem too impressed.
But at the same time, Shay approached the new president.
“The retail industry is ready to work with President-elect Trump and Congress to enact tax, trade and regulatory policies that will make America more competitive, increase domestic investment and create jobs,” he said.
Neil Saunders, managing director of GlobalData, said that Trump’s victory “brings a mixed bag of positives and negatives, with a large dose of uncertainty.”
While the tariffs are the “huge downside” to Trump’s win for retail, Saunders pointed to other policies the industry might welcome.
“The biggest positive for retail is that President Trump will almost certainly renew the tax cut package he introduced during his first term in 2017, which was set to expire at the end of 2025,” said Saunders. “This will largely help consumer incomes, although retailers should not expect an increase in spending as it involves carrying forward an existing policy that has already translated into consumer behavior .”
In addition, Trump has said the corporate tax rate should be lowered, a move that would help retailers invest more in their businesses, Saunders noted.
Trump is also expected to be more favorable to corporate takeovers than under President Joe Biden, whose administration blocked the $8.5 billion Tapestry Inc. deal. to buy Capri Holdings.
But Saunders said Trump’s changes won’t come all at once.
“Despite the disruptive change, it should be noted that changes happen at the edge and they happen over time,” he said. “A second Trump administration will not collapse retail, nor will it propel it to dizzying heights. It will only change the gradient of the trajectory and the tone of policies that retailers have to deal with.”
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