This could reignite inflation and weigh heavily on the broader U.S. economy and consumer spending.
President Donald Trump’s recent announcement of sweeping tariffs on goods from over 100 countries has sparked concerns about a potential trade war. This could reignite inflation and weigh heavily on the broader U.S. economy and consumer spending. Amazon (NASDAQ:AMZN), in particular, stands to be significantly affected as its online shopping marketplace is heavily dependent on goods sold by third-party merchants in China who supply a significant portion of the goods sold on Amazon. These tariffs could therefore drive up landed costs for a large proportion of Amazon’s inventory. Consequently, a trade war could also reignite inflation and weigh on the broader U.S. economy and consumer spending.
Amazon’s stock is not immune to economic downturns and it could face substantial losses. Evidence from 2022 shows that Amazon’s stock value decreased by over 50% within a few quarters. This begs the question: if a downturn similar to the one we saw in 2022 were to materialize, could Amazon’s stock, which was around $240 in February, potentially plummet to below $120? Now, of course, individual stocks are more volatile than a portfolio – and in this environment, if you seek upside with less volatility than a single stock, consider the High-Quality portfolio, which has outperformed the S&P 500 and achieved returns greater than 91% since inception.Why Is It Relevant Now?
The concerns raised earlier about the potential impact of tariffs on Amazon are particularly relevant now due to the current economic landscape. While Amazon, like many retailers, has always sourced goods from China and domestic brands with Chinese manufacturing, the present situation presents a larger risk. The recently announced sweeping tariffs, coupled with the increasing possibility of a widespread trade war with key global partners, puts a significant strain on Amazon’s global supply chain.
