The “worst-case scenario” seemed to be happening, Wells Fargo analysts warned investors.

On May 5 — a Sunday, when the stock market is closed — President Donald Trump tweeted a message that would send stocks plunging the next morning: His intention to levy a greater tax on the remaining imported goods from China.

Every company in Wells Fargo’s retail coverage gets at least some of its products from China, Wells Fargo analysts told investors in a May 15 note.

“This is a potential headwind that will broadly impact our universe,” analysts wrote about retail.

Last week, Trump threatened that he would impose escalating tariffs on all goods entering the country from Mexico, which National Retail Federation senior vice president for government relations, David French, said would “raise the cost of living for American families.”

Analysts have asked company executives about the potential harm from the China tariffs specifically, and the responses vary.

National Retail Federation president and CEO Matthew Shay said in a statement on May 13 that tariffs on imports from China would increase the cost of goods for consumers.

“Taxing Americans on everyday products like clothes and shoes is not the answer for holding China accountable,” Shay said in a statement. “Both sides will lose in a full-blown trade war, and the global economy will suffer.”

Wells Fargo analysts grouped some well-known retailers by China tariff exposure:

1. Shoes (nonathletic)

The most at risk is the nonathletic footwear category, analysts wrote, calling out the popular Steve Madden.

Steve Madden chairman and CEO Ed Rosenfeld told analysts in April that the company had “aggressively” moved production to Cambodia from China, and had negotiated price concessions on the items remaining in China.

“Our sourcing teams have really done a fantastic job of mitigating the impact of the tariffs on handbags and other accessories,” Rosenfeld said on the April first-quarter earnings call with analysts.

Skechers also sources more than 60 percent of its merchandise from China, analysts warned. Deckers Outdoor Corp. is also grouped in this category, but “is more insulated than the aforementioned companies,” the note said.

Wells Fargo’s analysts classified this group as having the highest exposure.

2. Certain clothing stores

Though these retailers are not quite as vulnerable as the fashion footwear companies mentioned before, they are still “highly exposed” to the tariffs. They are Urban Outfitters, Gap, Carter’s, and J.Jill.

These retailers have “relatively low” sourcing from China, but get most of their sales from the United States and have smaller operating margins, meaning any additional costs from tariffs would affect profits, analysts wrote.

Urban Outfitters.
Jessica Griffin / File Photograph
Urban Outfitters.

Frank Conforti, Urban Outfitters’ chief financial officer, said the company has been working on “strategies to reduce our overall exposure into the China market,” and there is a chance to increase prices for consumers for certain products.

“It’s kind of a moving target on a day-to-day basis,” Conforti told analysts in May. “So, if it does go into play in June, we will obviously have more to talk about on our next call.”

Though Stitch Fix is a newer business model with low China sourcing, it also has low margins, and “any incremental costs have a highly magnified impact on EPS,” analysts wrote.

The analysts classified this group as highly exposed.

3. Active and athletic wear

While retail overall is vulnerable to the tariffs, analysts expect athletic businesses to remain relatively unscathed.

Most of these companies have moved sourcing out of China. They get international sales, can better absorb added costs, and seem to have the power to raise prices, analysts wrote.

The athletic retailers mentioned include Lululemon Athletica,, Nike, Under Armour, and Foot Locker.

A line of workout pants at Lululemon, which has four stores in the Philadelphia area. It's a high-end retailer in the growing market for attractive athletic apparel.
Luis Sinco / Los Angeles Times File
A line of workout pants at Lululemon, which has four stores in the Philadelphia area. It's a high-end retailer in the growing market for attractive athletic apparel.

Dick’s Sporting Goods’ soft goods, like clothing, seem insulated from the tariffs, but hard goods, like equipment and electronics, are “indirectly exposed,” analysts wrote.

“We really don’t know what’s going to happen, and we’ve tried to take a more conservative approach to our guidance going forward,” Ed Stack, Dick’s chairman and CEO, said in a call with analysts on Wednesday. “So we don’t know what the cost will be, we don’t know what the price sensitivity will be, and we don’t know how the consumer will act.”

The analysts classified this group as least affected.

4. Off-price stores

The off-price retail stores, by nature, aren’t directly importing products from the source. Analysts estimate just 5 percent to 12 percent of sales are from imported goods.

The stores mentioned here are T.J. Maxx, Ross Stores, and Burlington Stores.

Burlington Store.
Matthew Hall / File Photograph
Burlington Store.

“We believe that they are in the proverbial ‘driver’s seat’ when it comes to negotiations with their suppliers,” analysts wrote.

Tom Kingsbury, Burlington’s chairman and CEO, took a positive approach to tariffs on a Thursday call with analysts and pointed out how tariffs could actually aid Burlington’s business model.

“We believe over time, tariffs may cause disruption in the supply chain, which is typically a positive for off-price retailers,” Kingsbury said. “If prices do go up across retail, this could possibly make value an even more important driver of consumers into the off-price channel.”

The analysts classified this group as highly insulated.

5. Global apparel and accessories

The global apparel and accessories companies have a large presence internationally and low sourcing from China, putting them in a good position to weather tariff increases.

Those companies are PVH, the parent of brands such as Tommy Hilfiger and Calvin Klein, and VF Corp., the parent of brands such as Vans, the North Face, Timberland, and Wrangler.

“As it relates to trade,” Steven Rendle, VF’s president and CEO, told analysts in May, “the impact of tariffs to date has been de minimis.”