Trump Tariffs Invalidated: Nike and Adidas Stocks Soar

Retail stocks made a notable jump on Tuesday after the US Supreme Court struck down a controversial set of tariffs imposed by Donald Trump.

The ruling is a major blow to the former president’s trade policy and brings immediate relief to companies such as Nike, Adidas and Victoria’s Secret.

Retail sector reacts strongly to ruling

The judge’s ruling led to immediate price gains on Wall Street. Victoria’s Secret & Co. increased by more than five percent. Shares of Adidas (+2 percent), sportswear brand Lululemon and fashion chain Abercrombie & Fitch (+5.5 percent) also rose.

Retailers import a lot of clothing and goods from countries such as China and Vietnam. The tariffs Trump imposed added costs for years. Now that those rates have expired, margins are improving and investors immediately appreciate that.

Trump acted outside his authority

According to the Supreme Court, Trump did not have the correct legal basis to impose the import duties. His government invoked an emergency law intended for national security, but, according to the judges, implemented it incorrectly.

Some of the tariffs were presented as retaliation against countries allegedly engaging in “unfair trade practices.” Others had to do with combating fentanyl smuggling, but the judge also found that link to be insufficiently substantiated.

Tariffs depressed profit margins for years

Since the introduction of the tariffs, import costs have risen sharply, especially for companies dependent on low-production countries in Asia. Sector organizations previously warned that the additional burdens were felt by consumers in the form of higher prices.

With the tariffs being rolled back, analysts expect several major retailers to raise their profit forecasts. Stock exchange Wedbush calls the ruling “a turning point for the American retail sector”.