Shares of retailers jumped Tuesday after the United States Trade Representative announced it was delaying proposed tariffs on clothing, footwear and a number of other items until Dec. 15.
Department store stocks such as Macy’s and Nordstrom also rose more than 3%. Ahead of the announcement, both Macy’s and Nordstrom had both hit 52-week lows in trading. Shares of big-box retailers Target and Walmart rose 5% and 2%, respectively.
The S&P Retail ETF (XRT) was up more than 3%, putting it on pace for its best day of the year.
Additional tariffs were expected to impact a range of consumer goods effective Sept. 1, just as retailers are gearing up for the busy holiday season. President Donald Trump announced last month that he would ratchet up the trade war with China and impose 10% tariffs on an additional $300 billion worth of Chinese goods.
“Although we are waiting for further details, we are pleased the administration will delay tariffs on certain consumer products,” said David French, senior vice president of the National Retail Federation, an industry trade group. “Clearly, the administration understands the importance of avoiding higher taxes on American families during the holiday season. Still, continued uncertainty for U.S. businesses and consumers is a drag on the economy. What we really need is an effective strategy to address China’s unfair trade practices by working with our allies instead of using unilateral tariffs that cost American jobs and hurt consumers.”
Retailers facing tariffs often manage by raising prices on consumers, or taking a hit on profits. In particular, department stores have been struggling of late to grow sales. In August, Barney’s filed for bankruptcy while J.C. Penney announced it was at risk of being delisted from the New York Stock Exchange because its shares had been trading too low.
“Leading retailers appreciate USTR’s efforts to limit the harm additional tariffs will place on American consumers,” said Hun Quach, vice president of the Retail Industry Leaders Association, in a statement. “Removing some products from the list and delaying additional 10% tariffs on other products, such as toys, consumer electronics, apparel and footwear, until Dec. 15 is welcomed news as it will mitigate some pain for consumers through the holiday season.”
Macy’s, Target, and Walmart declined to comment to CNBC.