By Amazon.com Inc (NASDAQ: AMZN) is broadly expected to take a hit now that President Trump has announced a 10% tariff on all imports from China.
The majority of items sold on Amazon come directly or indirectly from China – which makes this development a super negative for the e-commerce giant at least on the surface.
However, there’s reason to believe that Trump tariffs could prove to be a net positive for Amazon as they may make it easier for the US platform to compete with the likes of Shein and Temu.
Amazon stock has remained resilient in the face of Trump’s tariff announcement over the weekend.
Shein, Temu to lose edge against Amazon
Enormous variety and attractive prices have reportedly helped the likes of Shein and Temu to eat into Amazon’s market share in the United States.
Part of the reason these foreign online stores can offer lower prices in the US is the “de minimis exemption” that enables them to avoid duties on imports worth less than $800.
But that privilege is over following President Donald Trump’s first batch of tariffs on China.
Now that Shein and Temu will find it costlier to bring products from Beijing into the United States – they will likely lose their edge against Amazon, which makes the tariff news a positive one for AMZN, according to a senior Wedbush analyst Dan Ives.
What to expect from Amazon’s upcoming earnings
Amazon.com Inc. is scheduled to report its financial results for the fourth quarter on February 6th.
Consensus is for the e-commerce and tech behemoth to improve its revenue by more than 10% on a year-over-year basis to $187 billion while per-share earnings are anticipated to print at $1.52 – up a whopping 50%.
On the earnings call, investors and analysts alike will tune into Amazon’s take on what the tariffs mean for it, how it plans on mitigating the higher costs, and leveraging the potential hit to competitors in pursuit of sustained margins.
Ahead of the Q4 report, Amazon stock is up more than 45% versus its low in early August.
Wedbush Securities analyst sees upside in Amazon stock
Higher tariffs could prove to be a blessing for Amazon also because it has the scale to absorb the related costs – something that its Chinese rivals could find incrementally hard to do.
That’s why Wedbush Securities analyst Dan Ives raised his price target on AMZN shares last week to $280 indicating potential for another 18% upside from current levels.
Ives likes the e-commerce giant as it continues to improve the efficiency of its core retail business.
He also expects Amazon to come in ahead of Street estimates on February 6th partly because the US ended last year with a strong holiday season.
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