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Trade war: Stock market, business impact of US-China trade tensions

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The impact of the trade war between the US and China can be summarized by a comment last week from Stanley Black & Decker CEO James Loree.

“So it’s been a great 20 years of shareholder value creation,” he said in a presentation with analysts at an industry conference. “But last year, not so great.”

The industrial-tools-and-hardware company took a $370 million hit from US-imposed tariffs, foreign-exchange headwinds, and cost inflation in 2018, Loree said. The stock dropped 29%.

Stanley Black & Decker’s CFO said during the company’s first-quarter conference call that its tools and storage segment was hit from a similar mix of currency headwinds, tariffs, and commodity inflation.

And in an interview with The Wall Street Journal earlier this month, Stanley Black & Decker said it planned to move production of its Craftsman wrenches back to the US from China as tariffs have raised the cost of imports.

“If we knew that the tariffs were going to be permanent, we would make sweeping changes to the supply chain,” Loree told the outlet.

The company’s experience in managing the US-China trade war is emblematic of a broader set of difficulties companies across sectors — from retail to technology — face as retaliatory rhetoric has ratcheted up this month.

Trade talks between Beijing and Washington have all but stalled. The US government’s Huawei ban exacerbated tensions and sparked worries of an all-out technology “ cold war.”

Read more: It’s been more than a year since the US-China trade war started. Here’s a timeline of everything that’s happened so far.

Corporate management teams are increasingly assessing the financial impact of tariffs, with some changing the way they do business as a result of the newly imposed duties, according to an analysis from Yardeni Research.

Some are trimming their profit outlooks, or searching for new suppliers, the firm’s broad analysis found.

“Some companies are hoping their suppliers will absorb the cost of tariffs,” Ed Yardeni, the firm’s president, said in a May 23 note to clients. “And when all else fails, a few companies are reducing their full-year forecasts.”

And while the first-quarter earnings season proved strong by several measures, the threat of further tariffs “is a huge wild card,” John Lynch, the chief investment strategist at LPL Financial, said in a report out this week.

Below is a selection of commentary from companies in the retail, technology, and industrial sectors about how they are being impacted by the trade war — and the impact on their customers, too:

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