Why Shares in Stanley Black & Decker Got Crushed Today

Shares in Stanley Black & Decker (NYSE: SWK) were down by about 12% at noon ET today. The move is in response to the recently announced tariff actions by the Trump administration.

Three ways Stanley Black & Decker will be hit

The company took a major hit in costs the last time President Trump was in office, and it looks like a similar thing will happen this time.

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First, there's the hit to its costs from products from countries like China. CEO Don Allan discussed tariffs on the earnings call in January, noting that "seven, eight years ago, about 40% of what we sold in the U.S. came from China. And now we're down to a number that's closer to the mid-teens."

That's still a big number, and while management does have plans in place to switch production, given the imposition of heavy tariffs on China, the hit is still significant. For example, management said a 10% tariff rate on China would result in a "net impact of $10 million to $20 million" in 2025 for the company. As of today, the tariff rate on China is 54%.

Second, a trade war promulgated by tariff actions is negative for global growth, and that's bad news for a company making construction tools and engineered fasteners for the industrial sector.

Third, tariffs also tend to be inflationary, which usually means higher interest rates. These rates put a stranglehold on the construction markets and, in turn, demand for tools.

Image source: Getty Images.

What's next for Stanley Black & Decker?

Management can move production to other countries to avoid punitive tariffs, but as Allan noted in October, it's "unlikely that we're moving a lot back to the U.S., because it's just not cost-effective to do so." Still, it can lessen the impact of tariffs, and management has experience in doing so previously.

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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.