Retail stocks took a big hit after President Donald Trump rolled out sweeping tariffs, sending shockwaves through the market. Shares of Walmart (WMT), Target (TGT), and Nike (NKE) tumbled as investors braced for rising costs that could squeeze profits and push up prices. Even major players like Amazon (AMZN) and Costco (COST) saw their stocks slide more than 5%.
The new tariff plan slaps a 10% duty on all imports starting April 5, with an even steeper rate for 60 countries, including China (34%), Vietnam (46%), and the EU (20%). These rates stack on top of existing tariffs, making imports much pricier.
Analysts and Investors Sound Alarm on Tariff Shock
With the full scope of tariffs confirmed, industry experts warn that retailers have few ways to escape rising costs. GlobalData retail managing director Neil Saunders called the new tariff regime “shocking” in both its breadth and high rates, emphasizing that “there is no escape from tariffs.” Every importing company must now grapple with these higher costs.
Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, pointed out that the uncertainty leading up to the announcement left retailers with little time to “really plan and prepare.”
Meanwhile, shifting production away from China, Mexico, and Canada, once a go-to strategy for avoiding tariffs, is no longer enough. Gold explained that with higher tariffs now hitting a broader range of key exporter countries, retailers have even fewer options to cushion the impact.
According to CFRA analyst Arun Sundaram, the near-term consequences will be felt on margins, as “tariffs are realized first before companies start to mitigate” the added costs.
Can Subscription Giants Like Amazon and Costco Dodge the Pain?
Retailers with membership-based business models, such as Amazon and Costco, may be in a stronger position to navigate these challenges. Unlike traditional retailers, they can use membership fees to offset some of the increased costs, allowing them to keep prices more stable for customers.
Costco is already using its size and supplier relationships to negotiate better deals. Meanwhile, Amazon, despite its vast revenue streams, including its booming cloud business, faces challenges. CEO Andy Jassy warned that third-party sellers, who rely heavily on imports, could struggle to keep prices low.
Still, even these giants won’t escape unscathed. While they may delay price hikes longer than competitors, rising costs will eventually reach consumers.
Which Stock Is the Better Buy?
Turning to Wall Street, out of the five stocks mentioned above, analysts think that Amazon stock has the most room to run. In fact, AMZN’s average price target of $269.34 per share implies more than 37% upside potential. At the same time, analysts expect the least from COST stock, as its average price target of $1,088.25 equates to a gain of 12.76%.
