Shares of e-commerce giant Amazon (AMZN 5.25%) spiked today on news that President Donald Trump’s administration is willing to ratchet down its trade war with China. Specifically, The Wall Street Journal is reporting the administration may cut import tariff on goods from China by more than half.
Treasury Secretary Scott Bessent’s comments today that there “will be a de-escalation” between China and the U.S. also helped send stocks soaring.
Amazon stock was up by roughly 5% as of 12:45 p.m. ET.
145% tariffs no more?
While nothing has been formally announced, WSJ reported that a senior White House official said that the Trump administration is likely to reduce China tariffs to between 50% and 65%. The potential shift in tariffs may also include a tiered system in which some imports that aren’t considered a threat to national security would receive a lower tariff.
This comes after Trump said yesterday that the 145% tariffs on China are “very high” and that they won’t stay that high, adding that they would come down “substantially.” Bessent echoed Trump’s sentiment today in a keynote address, saying that China and the U.S. have an opportunity “for a big deal.”
In 2024, about 70% of the products sold on Amazon were made in China. Trump’s 145% tariffs on Chinese imports could therefore severely impact Amazon’s business, with many sellers likely to stop offering products on the platform while others significantly raising prices.
With the Trump administration indicating that it wants to find a way out of this trade war, investors are hoping Amazon’s e-commerce business will benefit.
Less rhetoric; more deals
Investors will still have to wait and see what, if any, tariff deals are reached with China. Any wavering on Trump’s part on trade negotiations could send Amazon’s stock falling again. Still, it’s good to see the administration seemingly wants to de-escalate its trade war with China.
The news comes on the heels of Trump saying yesterday that he has “no intention” of firing Federal Reserve Chairman Jerome Powell. Trump had previously indicated he wanted Powell to be fired because the Fed had decided to keep interest rates steady, instead of cutting them as Trump wants.
The legality of Trump’s ability to fire Powell was in question, and investors were worried that trying to do so would cause even more volatility in the market and the economy.
Amazon investors should be happy that the administration appears to be cooling down its tariff threats against China and backing away from threats to the Fed. But it’s worth keeping in mind that there’s still a lot of tariff and economic uncertainty right now, which will likely lead to more market volatility in the near term.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.