Retail Stocks Slump on Renewed US-Europe Tariff Fears
President Trump's threat to impose tariffs tied to a Greenland deal pressures major importers like Amazon, Walmart, and Target.
Shares of major U.S. retailers declined in Monday trading as investors reacted to unexpected new tariff threats from President Donald Trump against several European nations, injecting fresh geopolitical uncertainty into global markets.
Amazon (AMZN) saw its shares fall by 2.65%, while big-box retailers Target (TGT) and Walmart (WMT) dropped 1.82% and 1.11% respectively. The sell-off was triggered by concerns that new import duties could squeeze profit margins and disrupt the complex international supply chains on which these companies depend.
The catalyst for the market anxiety was a series of statements from President Trump, who announced a plan to levy a 10% tariff on goods from eight European countries beginning February 1, 2026. The president stated the rate would escalate to 25% by June if no agreement is reached for the United States to purchase Greenland, an autonomous territory of Denmark. The proposed tariffs target key U.S. trading partners including Germany, France, the United Kingdom, and the Netherlands.
The threat rippled through global markets before the U.S. session opened. European equities broadly fell, with France's Cac 40 and Germany's Dax closing down 1.78% and 1.33% respectively. According to a report from The Guardian, the news created a risk-off sentiment that carried over into U.S. trading.
For the retail sector, the prospect of a new trade dispute revives fears of margin compression. Major retailers often operate on thin margins and are highly sensitive to changes in the cost of goods. They face the difficult choice of either absorbing the higher costs from tariffs, thereby reducing profitability, or passing them on to consumers, which could dampen demand and fuel inflation.
While the comments were recent, they echo previous industry warnings. Amazon CEO Andy Jassy has previously noted that costs from tariffs can "creep" into the prices of goods sold on the company's platform as sellers are forced to pass on the expense.
European officials have reacted strongly to the proposal. European Commission President Ursula von der Leyen called the threat a "mistake," and other leaders have reportedly described the tactic as "blackmail," vowing to consider retaliatory measures. This raises the possibility of a damaging tit-for-tat trade war that could extend beyond the initially targeted goods.
Analysts noted that the unpredictable nature of the threats is a primary concern for investors. "Uncertainty is the biggest dampener on sentiment," analysts at AJ Bell stated, highlighting the difficulty for businesses to plan long-term capital and supply chain investments amid shifting trade policies.
Investors will be closely watching for a coordinated response from the European Union and any further clarifications from the White House. For now, the renewed tariff risk hangs over the retail sector, which remains a key bellwether for consumer spending and the broader health of the U.S. economy.