On the morning of Nov. 6, former President Donald Trump was celebrating the results of the U.S. presidential election sending him back to the White House in January. And that's precisely why Bank of America downgraded Five Below (NASDAQ: FIVE) stock this morning.

As of 10:15 a.m. ET, discount retailer Five Below stock was down about 9% and it had been down by as much as 12% earlier in the morning. Investors are reacting to commentary about how Trump's proposed economic policies could negatively impact this business.

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Five Below sells products targeted toward teens and preteens, ideally pricing things below $5. It needs cheap merchandise to ensure good profit margins. But according to CNBC, Trump has proposed up to a 60% import tariff on goods from China. And this would dramatically impact financial results for Five Below (and others) if enacted.

This is something Five Below addressed in its most recent annual report. Management wrote, "Increased tariffs as well as any newly imposed tariffs on items imported from China or elsewhere would likely result in lower gross margins on impacted products." In other words, its cost for those products would go up. Five Below would either have to raise prices, which is hard to do as a discount retailer, or it would have to accept lower gross profit margins.

This potentially negative impact is why Five Below stock is down today. But it's also why shares of companies including Wayfair (NYSE: W) and Yeti Holdings (NYSE: YETI) are down as well. Some on Wall Street were downgrading this duo along with Five Below today. As of 10:15 a.m. ET, Wayfair stock was down about 11% and Yeti stock was down about 8%.

What's going to happen?

I don't wish to suggest that economic policies from the president of the United Sates are inconsequential -- they matter a great deal. That said, investors seem to be assuming that Trump's upcoming term in office will necessarily be bad for business for Five Below, Wayfair, Yeti, and other companies that source products from China. But this isn't a foregone conclusion.

For reference, consider the long-term chart showing gross margin and operating margin for these three companies. Try to discern from the chart when Trump enacted his economic policies during his previous administration. And try to find a pattern of change once President Joe Biden took office.

In reality, elections come and go and the impacts to the stock market usually aren't as profound as feared. And this is because businesses aren't static. Every company can adapt to changes in its operating environment in unexpected ways.