Shares of luxury home furnishings retailer RH (NYSE: RH) spiked today after the Trump administration said that it’s working out a trade deal with China. The two countries have been locked in a trade war, and investors have been worried that retailers like RH will suffer if the economy slows down and consumers pull back on their spending.
With both countries cutting their tariffs as they work out a permanent deal, some retail stocks are on the rise today, with RH skyrocketing 17.9% as of 12:04 p.m. ET.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Image source: Getty Images.
Investors are happy to see the trade war cool down
There has been significant concern among investors that the escalating trade war between China and the U.S. would do significant damage to the economy and cause consumer spending to slow down. The U.S. formerly had tariffs as high as 145% on China, but has lowered them to 30% over the next 90 days as a permanent deal gets worked out.
RH shifted some of its manufacturing out of China to Vietnam after some tariffs were imposed on China during the first Trump administration, but still sources some of its products from the country. RH has previously been optimistic about Trump’s ability to negotiate better trade deals with countries, saying last month that tariffs could “improve and balance trade conditions around the world.”
But investors have been concerned that if the high tariffs on China remained in place, it could hurt RH’s business. J.P. Morgan raised its odds of a recession to 60% last month in light of tariff announcements, but investors are hoping the latest trade deal news will reverse that potential course.
There are still a lot of unknowns
It’s understandable that RH investors would respond positively to the latest tariff news. But it’s important to remember that a permanent deal hasn’t been finalized between China and the U.S., and there are still many trade deals yet to be made with other countries.
The Trump administration has already shown that it’s willing to break economic norms, which means that even when trade deals are announced, some companies and consumers may still not trust that the uncertainty is over. The result could be a cautious consumer regardless of lower tariffs.
All this means RH investors should continue to watch for any changing tariff news, and also for any indicators that consumers are tightening their belts.
Should you invest $1,000 in RH right now?
Before you buy stock in RH, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and RH wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $614,911!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $714,958!*
Now, it’s worth noting Stock Advisor’s total average return is 907% — a market-crushing outperformance compared to 163% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of May 12, 2025
Chris Neiger has no position in any of the stocks mentioned. The Motley Fool recommends RH. The Motley Fool has a disclosure policy.
