The market has been bracing for the 60% tariffs that President Donald Trump has been threatening to levy on Chinese imports ever since the 2024 presidential election campaign. The countdown has begun with the 25% tariffs on imports from Mexico and Canada to be administered as early as Feb 1, 2025. The 60% tariff talk for China has been replaced with a 10% tariff on all Chinese imports, starting on Feb 1, 2025. Importers of China's products can breathe a temporary sigh of relief, at least in the near term. Here are two stocks set to benefit from the walk down from 60% to 10% tariffs on Chinese imports.
Walmart Is China’s Largest Importer
While Walmart Inc. (NYSE: WMT) is an iconic American retailer, it is also the country’s largest importer of goods. According to law firm JD Supra, Walmart is China’s largest importer, accounting for 11.2% ($49 billion) of total U.S. imports ($448 billion) from China in 2024. Additionally, estimates are claiming 60% to 70% of Walmart’s products are imported from China, down from 80% in 2022. With these massive percentages, Walmart has major, if not the most, exposure to tariffs on Chinese goods, which is what helps keep prices low. A 60% tariff would considerably impact margins and/or prices at Walmart despite its economies of scale. Therefore, a 10% tariff is a relief. Anyway, you slice it for now.
Walmart Is Still Growing Like a Mid-Sized Company
Despite its behemoth scale of operations, retail/wholesale sector giant Walmart still operates as an agile organization. The company posted fiscal Q3 2025 EPS of 58 cents, beating consensus estimates by 5 cents as revenues rose 5.5% YoY to $168 billion, beating consensus estimates by $1.39 billion. Global e-commerce sales rose 27% YoY. Gross profit rose 21 bps to 24.2%. Operating income grew 8.2% YoY, and inventory fell 1% YoY. Walmart also issued upside fiscal full-year 2025 guidance.
Walmart U.S. accounts for 69% of net sales, while Walmart International accounts for 18% of net sales. The latter could be a problem if President Trump moves forward with 25% tariffs on Canada and Mexico.
Mexico Tariffs Are Another Can of Worms
Walmart is the dominant retailer in Mexico. Its Walmart Mexico (Walmex) net sales rose 5.9% in fiscal Q3 to $13.1 billion in constant currency. Comp sales rose 4.5%, driven by Sam's Club and Bodega. Walmart opened 33 new stores in the quarter and 177 new stores in the past 12 months. A 25% tariff on Mexican imports could increase Walmart’s operational costs and hit margins. If Mexico enacts a tit-for-tat tariff on U.S. imports, a trade war could ensue.
Walmart Would Win a War of Attrition
In the event of tariffs, Walmart’s competitors would also have to deal with blows to their margins or pass the costs onto customers. Since Walmart is the largest player in the game, they can use their massive economies of scale to negotiate with vendors and outlast the competition as they have done for over half a century. Its sheer size alone will ensure they are the proverbial "last man standing," especially when other retailers face the same tariffs.
Alibaba: Global B2B and B2C Giant Has United States Customers for 11.2% of AliExpress
China’s largest e-commerce company, Alibaba Group Holding Ltd (NYSE: BABA), is also the world's third-largest e-commerce platform. While it does the majority of its business inside of China, its AliExpress retail platform has customers from the United States. In fact, 11% of AliExpress customers are based in the United States. While most people shop on AliExpress due to its heavily deep discounted prices, a 60% tariff would no doubt cause many customers to look elsewhere for products, especially if it results in costing the same as domestic e-commerce sites like Amazon.com Inc. (NASDAQ: AMZN).
However, that may also be a problem, considering 63% of Amazon’s third-party sellers are based in China. Therefore, the 60% tariffs would still hit Amazon.com as well. China currently still has a 25% tariff on imports, which was initially imposed during Trump‘s first presidency and still sticks to this day. The downshift to a 10% tariff starting on Feb 1, 2025, has caused Alibaba's stock to rebound 5.13% year-to-date (YTD), even outperforming the Nasdaq-100, which is up 3.6% YTD as of Jan 24, 2025.
