These 16 retail stocks could get crushed by Trump's latest China tariffs

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  • On Thursday, President Donald Trump announced another round of tariffs on Chinese imports.
  • According to a report from UBS, hardline and grocery retail is one of the industries exposed to the new tariffs.
  • The 10% tax could hurt this year's earnings-per-share growth of companies that sell consumer goods, according to UBS. They also estimate that indirect impacts to consumers will weigh on company earnings.
  • Here are 16 retailers the firm says are at risk.
  • Read more on Markets Insider.

President Trump escalated his trade war Thursday when he threatened to levy a 10% tariff on a final $300 billion of goods from China, meaning that virtually all Chinese imports would face a tax.

The latest round is set to begin on September 1. The S&P 500, Dow and Nasdaq all fell after Trump announced the change on Twitter. In retaliation, China let the yuan slide to its lowest level against the US dollar in a decade, a move that Trump called currency manipulation.

Trump has said that tariffs are more damaging to China than they are to the US - but analysts have long disagreed with this view. Each round of tariffs has included more and more consumer goods, hitting US consumer's wallets, and hurting companies that manufacture or import goods from China.

Retailers will take a hit on the latest round, as will US hardline and grocery retail, according to a Monday note from UBS led by analyst Michael Lasser.

"Many hardline, broadline, & food retailers have messaged that the risk is 'manageable,' but we don't think that gives much weight to cross-elasticity of demand as the prices on many consumer goods go up," UBS wrote.

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The analysts also said that there are indirect implications of the latest round of tariffs that could drag down the sector.

"To the extent this macro uncertainty weighs on consumer confidence, household wealth, or inflation, it could have a meaningful indirect impact," UBS wrote. "At this point, we think it's likely to be a factor that weighs on stocks in the retail sector for at least the time being."

The analysts expect that tariffs will have a big impact on the upcoming earnings season, when retailers report quarterly performance. Companies that are most exposed to China will take the largest hit on earnings-per-share growth, which will weigh on stock price.

Here are 16 hardline- and grocery-retail companies UBS says are particularly exposed to Trump's new China tariffs. They're ranked in increasing order of how much their annualized bottom line will suffer.

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16. Sprouts Farmers Markets

16. Sprouts Farmers Markets

Ticker: SFM

Chinese imports as % of total imports: 20%

Est. annualized impact on 2019 EPS: -1%

Source: UBS

15. Ulta Beauty

15. Ulta Beauty

Ticker: ULTA

Chinese imports as % of total imports: 30%

Est. annualized impact on 2019 EPS: -1%

Source: UBS

14. Lowe's

14. Lowe's

Ticker: LOW

Chinese imports as % of total imports: 30%

Est. annualized impact on 2019 EPS: -1%

Source: UBS

13. Dollar General

13. Dollar General

Ticker: DG

Chinese imports as % of total imports: 60%

Est. annualized impact on 2019 EPS: -1%

Source: UBS

12. Tractor Supply

12. Tractor Supply

Ticker: TSCO

Chinese imports as % of total imports: 70%

Est. annualized impact on 2019 EPS: -1%

Source: UBS

11. Kroger

11. Kroger

Ticker: KR

Chinese imports as % of total imports: 20%

Est. annualized impact on 2019 EPS: -2%

Source: UBS

10. Hudson

10. Hudson

Ticker: HUD

Chinese imports as % of total imports: 30%

Est. annualized impact on 2019 EPS: -2%

Source: UBS

9. Walmart

9. Walmart

Ticker: WMT

Chinese imports as % of total imports: 40%

Est. annualized impact on 2019 EPS: -2%

Source: UBS

8. Costco

8. Costco

Ticker: COST

Chinese imports as % of total imports: 50%

Est. annualized impact on 2019 EPS: -3%

Source: UBS

7. Dollar Tree

7. Dollar Tree

Ticker: DLTR

Chinese imports as % of total imports: 70%

Est. annualized impact on 2019 EPS: -4%

Source: UBS

6. Five Below

6. Five Below

Ticker: FIVE

Chinese imports as % of total imports: 70%

Est. annualized impact on 2019 EPS: -4%

Source: UBS

5. Target

5. Target

Ticker: TGT

Chinese imports as % of total imports: 75%

Est. annualized impact on 2019 EPS: -5%

Source: UBS

4. Dick's Sporting Goods

4. Dick's Sporting Goods

Ticker: DKS

Chinese imports as % of total imports: 50%

Est. annualized impact on 2019 EPS: -6%

Source: UBS

3. Best Buy

3. Best Buy

Ticker: BBY

Chinese imports as % of total imports: 70%

Est. annualized impact on 2019 EPS: -8%

Source: UBS

2. Office Depot

2. Office Depot

Ticker: ODP

Chinese imports as % of total imports: 50%

Est. annualized impact on 2019 EPS: -12%

Source: UBS

1. Bed Bath & Beyond

1. Bed Bath & Beyond

Ticker: BBBY

Chinese imports as % of total imports: 65%

Est. annualized impact on 2019 EPS: -13%

Source: UBS

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