Stanley Black & Decker (SWK 4.84%) declined by more than 11% in trading at noon ET today. The fall comes as the market sold off after a historic rally yesterday. However, the fact that the company's stock price declined so aggressively speaks to the market's view of the tools and industrial products company's exposure to trade disputes.
Stanley Black & Decker and tariffs
Aside from its obvious exposure to any tariff-induced decline in the economy (significant as discretionary spending on DIY tools and industrial fasteners gets cut in a slowdown), Stanley Black & Decker has specific exposure from sourcing products from countries like China.
NYSE: SWK
Key Data Points
Management discussed the issue on an earnings call before President Trump's election victory in late October. CEO Don Allan told investors that the company's plans in response to tariffs on China involve "potentially moving things from China to other parts of Asia, maybe to Mexico."
Fast-forward to February, after a 10% tariff had been applied to China, and Allan said, "Based on how we would react, this will result in a 2025 net impact of $10 million to $20 million."
Image source: Getty Images.
Where Stanley Black & Decker stands now
The company has reduced dependency on China, with Allan noting that in Trump's last administration, 40% of its products sold in the U.S. came from China, but the figure is down to around 15%.
Still, tariffs on China currently stand at 145%, significantly more than in the scenario discussed above, and they are being applied in countries where the tools company might have been aiming to shift production. Whichever way you look at it, it's likely to get hit, and that consideration is why its stock is sold off with any negative sentiment over tariffs.
