5 Stocks to Sell on the New China Trade War

The “tariff man” is back, with President Donald Trump renewing his trade war impulses. So far he’s threatened tariffs on Canada, Mexico, China, on all steel and aluminum imports. While Trump has relented, for now, on Canada and Mexico tariffs, the China tariffs have gone into effect, and China has responded in kind.

American companies do billions of dollars of business with China every year, and Chinese imports make up a considerable chunk of goods in the electronics, apparel, semiconductor, furniture, and toy industries here in the United States.

However, some companies have more pricing power than others. Firms with tight margins, ample competing substitutions, or inelastic demand may face consumer pushback on price increases. 

Here are the five stocks that will suffer the most in a trade war with China.

Now, tariffs are simply import taxes charged on goods as they arrive at the border. A common misconception is that the exporting country pays tariffs, but tariffs are actually paid by the company importing the product as it crosses the border. Charging tariffs to the exporter would create a cluster headache as the government would be forced to collect taxes in various currencies; instead, the tax is charged to the imports and collected in US dollars.

Both left- and right-leaning economists agree that consumers eventually bear the tariff burden as companies pass on the cost increases to their customers. The companies that can least shift the burden to consumers that way are the ones that will suffer the most from tariffs.

Hasbro Inc. HAS

Thankfully, the holiday season has come and gone because toys and games could be getting more expensive in the next few months. Hasbro is a 100-year-old entertainment holding company that owns popular brands like Milton Bradley, Parker Bros, and Wizards of the Coast. The company makes popular games like Twister, Battleship, and Monopoly, along with toy lines like Nerf, Transformers, Power Rangers, GI Joe, and Play-Doh.

Hasbro is on our sell list over rival Mattel due to its heavy reliance on Chinese factories to produce its goods, despite attempts to shift production to India or Vietnam over the last few years. Gross profits have been in annual decline since 2021, and while analysts are still primarily bullish, cracks are beginning to form. In January, Stifel cut its price target on HAS shares from $82 to $77.

PDD Holdings Inc. PDD

PDD Holdings is the United States equity of Chinese retail conglomerate Pinduoduo, which operates the discount merchandiser Temu. If you have a social media account, you've likely seen ads for Temu, which offers incredibly low pricing on a variety of merchandise, including clothes, sports jerseys, handbags, and other apparel.

Temu is one of the companies that will be heavily impacted by the decision to remove the de minimus exemption on packages arriving from China or Hong Kong. The exemption calls for a refrain from duties and taxes on merchandise received at the border valued under $800, which would describe nearly all the orders arriving on US shores from Chinese retailers like Temu. (Note: Trump reversed the exemption decision late Friday.) Retaliatory tariffs are expected from China as well, and analysts from JP Morgan, Benchmark, and Jeffries have all reduced their PDD price targets since election day in the US.

Apple Inc. AAPL

Even megacap tech stocks like Apple aren't safe from broad tariffs, especially considering how reliant the iPhone maker is on Chinese sales. And while putting a $3.5 trillion company on a sell list might seem bold, Apple has been under the microscope for the last few months. AAPL shares had a solid 2024 run, jumping from $165 in April to $260 by Christmas. But the company has started 2025 stuck in molasses, and shares are already down more than 8% year-to-date.

Chinese iPhone sales are the obvious cause for concern. During its recent earnings release, Apple reported that iPhone sales in China declined 18% in Q4 2024, while competitor Huawei saw a more than 15% bump in smartphone sales in the same period. Apple may be forced to offer new discounts on iPhones to restore sales growth, and the looming threat of tariff retaliation could put even more pressure on Tim Cook's tech giant.

PVH Corp PVH

PVH has been dropping like a stone since cracking the $140 mark in December. The $140 price was the highest in over six years for PVH, but headwinds have rapidly materialized for the beleaguered apparel maker.

These tariffs will significantly impact production as PVH has 128 factories in China, 40 more than the next closest hub in Vietnam. The company has manufacturing locations in more than 30 nations, but the Chinese manufacturing output is crucial due to the high quantity of skilled workers employed. Nearshoring or reshoring wouldn't resolve this labor issue, and high-quality PVH brands like Calvin Klein and Tommy Hilfiger should see the most significant price increases.

To make matters worse, China's Ministry of Commerce has now added PVH to its unreliable entities list and claims its practices "interfered with the operations of Chinese companies." Analysts at Wells Fargo agree with the concerns as they downgraded the stock from Overweight to Equal Weight last week and dropped their price target from $130 to $105.

Under Armour Inc. UA

Under Armour makes sports apparel and footwear, and its strong manufacturing presence in China has placed it squarely in the crosshairs of a trade war. UA executives have warned about pressure from tariffs since Donald Trump's election night victory. Under Armour has stated that only 15% of its production remains in China, but the company's tight margins and competition could spell problems for its bottom line.

UA beat on earnings and revenue in the most recent February 6 conference call, but disappointing guidance sent shares tumbling. The stock lost more than 6.5% in the week of the earnings release as investors digested the guidance figures and tariff threats. No analyst covering the stock has updated their coverage since June 2024, but UA stock is clearly facing some serious headwinds as 2025 rolls along.

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