Jun 2, 2019

Trump's China trade war meets the retailpocalypse

Interior view of closed retail store in California on August 20, 2018. Photo: Smith Collection/Gado/Getty Images

Abercrombie & Fitch stock plunged 25% on Wednesday. JCPenney stock is trading at $0.80 per share, down from a high of $80 in early 2007. And Dressbarn is closing down entirely.

What to watch: Now comes the trade war. Hallmark doesn't expect to be able to exempt greeting cards from the next tranche of Chinese tariffs, according to an internal memo seen by Axios' Dan Primack.

  • Hallmark imports around $500 million worth of products from China each year, including plush toys and Christmas ornaments. That puts the potential tariff impact at more than $100 million, at least some of which the company expects to pass on to consumers.
  • "Hallmark and our suppliers cannot absorb the full impact of the increased cost," says the May 15 memo. "Despite all supply chain creativity, it will not solve the whole problem."

Why it matters: The trade war is already hurting retailers, if only in terms of the amount of time that company executives are being forced to spend on contingency planning. Worse is yet to come.

Go deeper: Trump's trade war sends retailers into a maelstrom

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Scoop: Inside the Trump campaign's big hedge on Facebook

Illustration: Eniola Odetunde/Axios

The Trump campaign has invested most of its advertising budget to date on Facebook, testing thousands of versions of ads per day to maximize its spending.

But behind the scenes, a source familiar with the campaign tells Axios, the thinking has shifted: "As everyone can see, we still have strong spending on Facebook, but the percentage of our total media budget [on Facebook] is shrinking."

Trump's revenge tour has the House in its sights

Illustration: Aïda Amer/Axios. Photo: Saul Loeb/Getty Contributor

In the lead-up to the 2018 midterm elections — buoyed by Republican control of both chambers — President Trump viewed campaigning for the House as a lower-tier priority and instead poured his energy into rallying for the Senate.

But after the GOP reckoning in 2018, and experiencing firsthand how damaging a Democratic-led House has been to him, Trump is now personally invested in helping Republicans regain the majority in November, several people familiar with his thinking tell Axios.

Pelosi warns U.S. allies against working with China's Huawei

Nancy Pelosi, Feb. 16. Photo: Sven Hoppe/picture alliance via Getty Images

House Speaker Nancy Pelosi on Sunday cautioned U.S. allies against allowing Chinese telecommunications giant Huawei to develop their 5G networks, arguing at the Munich Security Conference that doing so is akin to “choosing autocracy over democracy," CNBC reports.

Why it matters: Pelosi's hawkish stance marks a rare area of agreement with the Trump administration, which believes Huawei is a national security threat because the Chinese government may be capable of accessing its equipment for espionage.

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