Trump’s Tariffs Slam Retail as Russia Sanctions Send Energy Prices Higher

Weekly Selloff Sets Stage for August Showdown

All three major indexes posted losses last week as Trump escalated his tariff campaign, culminating in Saturday’s announcement of 30% duties on EU and Mexican imports effective August 1st.

The Dow, S&P 500, and Nasdaq all declined as Trump sent tariff letters to 24 countries throughout the week, threatening duties ranging from 20% to 50%.

The effective U.S. tariff rate has now jumped from 2.5% at the end of 2024 to over 17%, with Goldman Sachs warning that sustained implementation could cut S&P 500 fair value by 5%.

Pre-market futures are trading lower Monday morning, suggesting investors remain concerned about the escalating trade tensions heading into the new week.

Energy Stocks Benefit from Geopolitical Chaos

Energy emerged as the clear winner amid last week’s turmoil, with oil prices posting modest gains on supply disruption concerns.

Russian sanctions developments continue supporting the sector as the UK targeted 20 tankers in Russia’s shadow fleet while the U.S. Treasury expanded sanctions to nearly 100 military-linked entities.

The tightening sanctions regime helps domestic producers like Exxon and Chevron by reducing global competition.

Meanwhile, speculation about potential sanctions relief pushed Moscow’s market up 3%, though the underlying policy environment remains hostile with U.S. banks now restricted from processing Russian energy payments.

Retail Sector Faces Mounting Pressure

Retail stocks bore the brunt of selling last week as tariff costs cascade through supply chains. Nike exemplified the sector’s challenges, reporting a $1 billion tariff hit while announcing upcoming price increases.

Across distribution networks, companies are systematically raising prices 8-15% according to ITS Logistics, with footwear retailers expecting retail price hikes up to 10%. The key differentiator is pricing power.

Costco demonstrated selective strategy by raising prices on discretionary items like flowers while protecting staples like bananas. Most retailers lack this flexibility, making them vulnerable to margin compression.

Critical August 1st Deadline Approaches

The next three weeks will determine market direction as the August 1st tariff deadline looms. Energy stocks appear well-positioned regardless of outcome, benefiting from geopolitical premiums and supply disruption narratives.

Retail faces a binary outcome based on pricing power, with companies like Costco and Home Depot better positioned than margin-pressured importers.

The wild card remains a July 31st federal court ruling that could invalidate Trump’s tariff authority entirely.

Any delay past August 1st would likely trigger relief rallies, while full implementation could accelerate rotation away from tariff-sensitive sectors.

More Information in our Economic Calendar.