Global markets have reeled this week after President Donald Trump announced tariffs on $1.4 trillion of imports from Canada, Mexico, and China. 25% were levied on Canada and Mexico, though the Mexican tariffs have been paused for a month.
Regardless, this is the most aggressive trade policy shift since the 1930s. Automakers, energy firms, and retailers are bearing the brunt of Monday’s selloff. Trump is also dismantling the de minimis trade loophole, so Chinese e-commerce giants like Temu and Shein can no longer flood U.S. markets with duty-free, low-cost goods. Plus, companies that have more of their supply chain inside the U.S. already are likely to be resistant and even rise as investors find safe havens from tariffs
Here are three such stocks that could gain from Trump’s tariffs:
Etsy (ETSY)
Etsy (NASDAQ:ETSY) is well-positioned to benefit from Trump’s tariffs as the company has a domestic seller base and there’s no big exposure to cross-border trade disruptions. As I’ve noted before, Temu and Shein are going to have to pay tariffs and this should lead to reduced competition for Etsy.
Etsy has a U.S.-centric marketplace for handmade and vantage goods which could now gain a lot of market power with foreign e-commerce competitors losing theirs. The stock gained in pre-market and seems to be making a turnaround from its earlier losses as tariffs take effect.
Q3 2024 revenue came in at $662.4 million, up 4.1% year-over-year. This beat estimates of $652.8 million. GMS declined by 6%. That said, adjusted EBITDA margin came in slightly above guidance at 27.7%. Net income fell 34.7% to $57.4 million due to higher marketing spend, but this is something that can be improved on without pressure from Temu and Shein.
Analysts currently have a consensus price target of $54.75 on the stock, but that could go up as tariffs take hold.
ETSY stock is still down around 9% from pre-COVID prices.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) is an obvious pick if you’re looking for stocks that could benefit from the Trump tariffs. This is the largest e-commerce company in the U.S., and the closure of the de minimis loophole will make the e-commerce market a lot less competitive.
Unlike Temu and Shein, Amazon has a massive U.S. logistics network with fulfillment centers and partnerships with third-party sellers that allow faster delivery times and now will allow prices that can compete with that of Temu and Shein. Chinese sellers could also shift to Amazon’s U.S. warehouses and use fulfillment by Amazon for faster shipping.
Moreover, Amazon’s business is pretty insulated regardless of tariffs. The company is diversifying sources heavily to avoid tariff-heavy regions. Analysts expect 49% earnings growth this year from AI and cloud expansion, so if the e-commerce segments get boosted by tariffs hurting competitors, the stock could surge more.
Chipotle Mexican Grill (CMG)
Chipotle Mexican Grill (NYSE:CMG) has arguably been the hottest stock in the past five years, as it is up 237.67% in that time frame. Tariffs could help it rise even further. Of course, it is still going to feel some cost pressures from avocado and some ingredient sourcing. However, Chipotle has lots of pricing power and tariffs will only justify more menu price hikes.
It was reported back in 2019, during Trump’s first term, that a 5-cent increase per burrito could offset $15 million in tariff costs. Something similar could be done in 2025.
Regardless, a few million isn’t a big deal for Chipotle. Net sales are projected to grow from $11.3 billion in 2024 to $14.5 billion by 2026, with 13-14% annual growth driven by new store openings and comp sales. Q4 2024 revenue is forecasted at $2.85 billion, up 12% year-over-year.
EBITDA margins are also expected to expand from 20.1% in 2024 to 21.7% in 2026. FCF is expected to rise from $1.6 billion in 2025 to $1.85 billion in 2026. The company sources more than enough products domestically to not worry much about tariffs. Instead, the impact of tariffs on competitors could cause Chipotle to thrive.
The consensus price target of $69.82 implies 19.6% upside from here.
— Omor Ibne Ehsan
New research reveals what Elon Musk could be planning in Washington D.C. and how it may impact your money. In short, Elon has much bigger plans than simply "draining the swamp." His next big project could bring about nothing short of a revolution in our economy... It could change the way you file and pay your taxes... collect Social Security... and how you travel. To do it, Elon will likely use the same strategy he’s applied in every other business. See the playbook, here.
Source: Money Morning