Amazon.com Inc. (NASDAQ: AMZN), is expected to suffer a blow now that Trump announced 10% tariffs on imports coming from China.
Amazon sells a majority of its products directly or indirectly in China. This is a negative development for Amazon, at least from the outside.
There’s some reason to think that Trump’s tariffs will be positive for Amazon, as it may allow the US platform more competition with platforms like Shein and Temu.
Amazon’s stock price has held up well in spite of Trump’s announcement on tariffs over the weekend.
Shein and Temu lose to Amazon
Shein, Temu and other retailers have been credited with reducing Amazon’s share of the US market due to their huge variety and competitive prices.
The “de minimis exception” allows these online foreign stores to offer cheaper prices in the US because they can avoid paying duties on imported goods worth less than $8,000.
After President Donald Trump’s initial tariffs against China, this privilege has ended.
According to senior Wedbush Analyst Dan Ives, Shein and Temu are likely to lose the competitive edge they had against Amazon now that the cost of bringing products into the United States will be higher. This news is a good one for AMZN.
Amazon earnings to be announced in the near future
Amazon.com Inc. will report its results for the Fourth Quarter on 6 February thTHESTREET
The consensus is that the tech and ecommerce giant will increase its revenues by over 10% year-over-year to $187 billion, while earnings per share are expected to be $1.52 — up an astounding 50%.
Investors and analysts will be listening to Amazon’s earnings call for its take on the impact of tariffs on the company, the ways it intends on mitigating these higher costs and how it hopes to leverage the possible hit on competitors, in order achieve sustained margins.
Amazon’s stock has risen more than 45% since its early-August low.
Analysts at Wedbush Securities see Amazon as a potential winner
Amazon could benefit from higher tariffs because of its size, which allows it to absorb costs. This is something Chinese competitors may find difficult to achieve.
Wedbush Securities’ analyst Dan Ives increased his price target for AMZN last week from $280 to $280, indicating a potential 18% increase in value.
Ives is impressed by the fact that the online retail giant continues to enhance the effectiveness of its core business.
Amazon is also expected to beat Street expectations on the 6 th, partly due to a good holiday season in the US.
As new information becomes available, the post Trump’s tariffs can help Amazon compete against Shein and Temu could be updated.
