Amazon stock surged Monday as the U.S. and China agreed to slash tariffs in a trade war cooldown that was beyond Wall Street's expectations. It proved good news for investors of e-commerce stocks in both countries, with Amazon rallying 8% and U.S.-listed shares of China e-commerce giant Alibaba Group jumping nearly 6%.
The deal announced on Monday gives China a similar deal to the one U.S. gave to every other country on April 9, temporarily reducing reciprocal tariffs to 10% for a 90-day negotiation period. However, a separate 20% tariff imposed by President Donald Trump in February and March for China's role in fentanyl trade remains in place. That would bring the total levy on Chinese imports to 30% rather than the previous 145%.
Amazon stock rallied 8.1% to close at 208.64 on the stock market today. E-commerce stocks tied to both countries closed higher. Alibaba stock added 5.8% to end at 132.55, ahead of an earnings report due early Thursday. Temu parent company PDD Holdings gained 6.1% to close at 116.38, despite reports that Trump's suspension on the de minimis exemption for duties on small packages from China to the U.S. will remain in place.
Amazon Stock Retakes 200-Day Line
Amazon premarket gains put the stock on track to retake its 200-day moving average. The tech giant's shares have traded below that long-term trendline since March 27, according to IBD MarketSurge. Amazon recovered back above its 50-day moving average in trading late last week.
Wall Street analysts have spent the majority of this year debating how tariffs could hit Amazon's massive digital storefront. Amazon stock slumped 10% the day after April 2's "Liberation Day," when President Donald Trump announced his broad tariff plan. Shares closed on Friday down more than 20% from record highs reached in February.
About half of Amazon's third-party Marketplace sellers are based in China, by some estimates. That makes calculating the broader impact for Amazon from triple-digit tariffs on Chinese imports "nearly impossible," William Blair analysts recently warned. Separately, Raymond James analysts estimate that 30% of Amazon gross merchandise value is "China-linked," with Chinese sellers also accounting for about 15% of revenue for Amazon's profit-boosting adverting business.
Amazon stock fell slightly after the company reported first-quarter earnings on May 1. The company's profit outlook was below expectations, with Amazon warning investors of trade uncertainty.
Meanwhile, Alibaba is less reliant on the U.S. market for its e-commerce business. But some investors have expressed concerns about a protracted trade war weighing on consumer spending in China. Alibaba stock is ahead more than 47% this year but down from highs reached in mid March, before trade concerns started weighing on shares.
