Lots of words could define the world of retail. "Competition," "pricing" and "products" are a few. But in 2025, "uncertainty" is rife. The word was mentioned 11 times on last month's Amazon earnings call. And while recent tariff moves have calmed investors' worst fears for now — even carrying Amazon stock near a possible buy point this week, after it tumbled early this year — big questions remain, with the potential to upend business at Amazon and its competitors.
On last month's Amazon earnings call, Chief Financial Officer Brian Olsavsky told analysts the company's outlook reflected "the general uncertainty that we're seeing." And the comment wasn't unusual. In other calls with analysts, Walmart CFO John David Rainey warned the industry faces "a lot of uncertainty, a lot of volatility," while Best Buy CEO Corie Barry pointed to uncertainty "related to tariff levels, timing and countries involved."
The warnings underlined how retail giants like Amazon and Walmart and the businesses that sell products through them are grappling with the tariff turmoil that pushed them behind the eight ball in a fast-changing economy. President Donald Trump's trade policies have disrupted supply chains, triggering fears of rising prices and slumping consumer demand.
A tariff truce with China has brought temporary relief, helping Amazon stock and other megacap tech stocks bounce back. But the roller coaster ride isn't over. Big retailers led by Amazon, Walmart and Target are bracing for more sharp drops and turns in the coming summer shopping season, when the magnitude of the disruption is expected to become clearer.
Spotlight On Prime Day
The spotlight now is on one of the year's biggest shopping events, Prime Day.
The tariff turmoil rattled businesses gearing up for Amazon's much-awaited shopping event for Prime members in July. Goods with ties to China represent about 30% of the gross merchandise value sold on Amazon's platform, according to Raymond James. Amazon's third-party marketplace includes sellers based in China as well as U.S. companies that import goods from the country.
Until recently, brands that sell on Amazon were grappling with a 145% tariff on goods made in China as they figured out their plans for Prime Day.
"There were real discussions of 'Are we going to do Amazon Prime Day?'" Samantha Coxe, chief executive of Flaus, a maker of electric flossers, told Investor's Business Daily. "Are we going to sell out (existing inventory)? Are we going to have to increase prices?"
U.S.-China Tariff Deal Brings Relief
Pattern, which partners with brands to sell their products on Amazon and elsewhere, felt that it was at a "precipice," Chief International Officer Brett Bardsley told IBD. Without "tariff news," it risked quickly consuming the inventory it had, with uncertainty about when manufacturers could provide more goods.
Then came a major twist. The Trump administration announced a deal with China that would scale back the stunning 145% tariff on Chinese imports to a still painful, but perhaps manageable, 30%.
The reduction was enough for Coxe to declare "full-steam ahead" for Flaus' Prime Day plans. The company shipped all the devices that its manufacturer in China was holding and expects to have enough to stretch into late this year.
Pattern, too, got the news it was looking for with the tariff reduction. Manufacturers ramped back up quickly, and the company leaned on airfreight and expedited shipping to refill its domestic inventory, Bardsley said.
Shifting Tariff Policies
The two companies' stories underscore the uncertainty that all retailers have been working with since Trump's "Liberation Day" tariff announcement on April 2. While tariffs on most trading partners were reduced to a baseline 10% later that month, goods from China were facing a 145% Trump tariff by the time Amazon reported first-quarter results on May 1. By the time Walmart reported its Q1 on May 15, the China tariffs had been slashed to 30%.
The China truce is expected to boost the summer shopping season. But it is unlikely to fully clear up the uncertainty which many retailers have cited as a drag on business.
The turmoil became even more pronounced when a U.S. court put all of Trump's tariffs on hold two weeks later around the time Best Buy reported its results, only for an appeals court to pause that ruling. The legal fight us expected to land in the Supreme Court.
"There's just so much uncertainty," Alison Layfield, director of product development at global shipping provider ePost Global, told IBD. "You may have goods in transit and then (a change) hits."
Summer Sales Key For Amazon Stock
Shoppers have mostly held steady so far. U.S. e-commerce spending was pacing toward 8% year-over-year growth in May, according to JPMorgan. That's in-line with April's growth rate and down just slightly from 9% in March.
The annual Amazon Prime Day shopping event in July offers retail's next big test. The company has not announced the dates. But Amazon has said it expects deals to spill out over four days this year, doubling the length of last year's event.
With concerns about tariffs raising prices overall, shoppers appear anxious for deals. More than 80% of Amazon Prime members surveyed in early May said they expected to shop on Amazon during Prime Day, up from 68% in 2024, according to research firm Tinuiti.
Prime Day isn't just significant for Amazon and Amazon stock. The decade-old tradition has been so successful that rivals like Walmart and Target typically launch sales campaigns that same month.
Last year, U.S. shoppers spent an estimated $14.2 billion across e-commerce platforms during the two-day Prime Day event, according to Adobe Analytics.
'Head-Spinning' Reaction To Tariffs
But the impact of the tariff turmoil on one of the biggest shopping seasons of the year remains unclear. Even with the rollbacks on the highest rates, U.S. retailers still face a 30% tariff on Chinese imports and roughly 10% tariffs on goods from nearly anywhere else.
"The initial reaction was head-spinning for brands and retailers trying to figure out what to do with 145% tariffs – many had paused shipments from China after pulling orders ahead," EMarketer e-commerce analyst Sky Canaves told IBD. "Now there is a sigh of relief. But there is still the uncertainty of a 90-day pause (for China tariffs) while we are smack in the middle of the pause on reciprocal tariffs."
Meanwhile, consumer confidence ticked up after the U.S.-China trade agreement but remains sharply down from the start of the year.
While the tariffs are under fire in court, tensions between the U.S. and China have been heating back up, stressing what analysts see as a fragile trade war detente.
"We would stress that it's far from clear that the 90-day pause is an uncertainty-clearing event," Morgan Stanley strategists wrote to clients on May 18. "Trade tensions are likely to remain elevated."
Tariff Impact On Retail Supply Chains
The U.S. and China account for 51% of all cross-border retail e-commerce sales globally, according to Euromonitor. But the supply chain connecting the two economic superpowers has felt the effect of the tariff whirlwind.
Amazon and its marketplace sellers had beefed up their inventories before tariffs took effect to keep inventory up, CEO Andy Jassy told analysts on May 1. A surge of U.S. imports in the first quarter showed that other retailers followed suit.
But imports slowed significantly as the tariffs hit. They picked back up rapidly following the May 12 deal between the U.S. and China. Container-tracking software firm Vizion found that bookings from China to the U.S. jumped 157.6% for the week of May 12, compared to a week earlier.
Bracing For Prime Day
In fact, while some companies were reportedly planning to sit out Prime Day or at least go lighter on discounts, others are now quickly moving to get their products ready. Some companies are "sitting quite heavy" on inventory to protect against future trade changes, which puts them in a position to discount, Bardsley said.
Still, some categories like electronics or brands with large exposure to China are expected to move cautiously when it comes to discounts, he added.
Amazon is "pleased by the strong response from selling partners to Prime Day 2025," a spokesperson said in an email.
"We're working with our broad, varied range of valued selling partners in our store to support them in adapting to the evolving environment while maintaining low prices and broad selection for customers," the statement continued.
What Tariffs Mean For Prices
Before the lower tariffs cleared the path to Prime Day, Flaus, the electric flosser maker, was considering moving some inventory into a "bonded" warehouse that allows importers to defer custom payments, Coxe told the Wall Street Journal in late April. The company had concerns that its existing stock would last to Prime Day. Flaus sells directly through its website and on Amazon.
The agreement to lower tariffs cleared the path to Prime Day. Coxe said the company has the margins to absorb the 30% tariff rate and is not planning to increase prices. "That's a last resort," Coxe said.
Other companies also seem to have taken that approach when it comes to price increases.
"There was very much a view of, 'Let's wait it out,'" Scott Needham, CEO of data analytics platform SmartScout, told IBD. "Let's see if it'll change and not make any drastic changes that we can't reverse."
SmartScout serves independent sellers and brands that use the Amazon platform. About 4,000 top-selling products on Amazon were at all-time high prices on the day the U.S.-China tariff deal was announced, according to SmartScout data. That's out of a sample of about 130,000, Needham said.
Big retailers have offered mixed views on prices. Amazon had not seen an increase in average selling price across the platform, Jassy said at the company's annual shareholder meeting in May. He said he also has not seen any "attenuation," or slowing, of consumer demand despite the uncertainty.
But Rainey, Walmart's CFO, told CNBC in May that tariffs are "still too high" even after the deal with China. Consumers will start seeing higher prices, he warned.
Why Raising Prices Is Politically Risky
That view triggered a strong reaction from the Trump administration, which maintains that the tariff push can rebalance global trade without leaving U.S. consumers with sticker shock. Treasury Secretary Scott Bessent told CBS News in June that some companies, including Amazon and Home Depot, had said they will avoid price hikes.
Raising prices can be politically risky. After Walmart's commentary, Trump wrote on Truth Social that Walmart should "EAT THE TARIFFS." The Trump administration also called Amazon's reported plan to list the tariff cost of products as a "hostile and political act." Amazon clarified that it only briefly considered listing tariff costs for products in its low-cost Haul section.
But the Walmart CFO's comments are "really important," Dan Salmon, an Amazon stock analyst with New Street Research, told IBD. "Amazon always wants to be very price competitive and, certainly in the U.S., Walmart is the No. 1 competitor they will measure themselves against."
Will E-Commerce Suppliers Shift To U.S.?
Questions have also been raised about a key goal of the Trump tariffs: boost U.S. manufacturing jobs to make the U.S. less dependent on Chinese manufacturing.
Some sellers on Amazon and elsewhere have worked on diversifying where they manufacture or purchase their goods. That includes weighing which products can be made in the U.S. or elsewhere.
For many, that process started during Trump's first term when he enacted more limited tariffs on Chinese goods, according to Owen Carr, chief merchandising officer at Spreetail, an e-commerce logistics and management company that is among the top third-party sellers on Amazon, Walmart and Target.
But moving supply chains to the U.S. or elsewhere can take three years and require significant resources, Carr told IBD.
It may be doable for some brands or products. "But you're going to have all these other costs that can get you," Carr said. "And so those are just all factors that you have to work through."
Navigating Uncertainty For Amazon Stock
Meanwhile, investors continue to work through the tariff turmoil's impact on Amazon stock.
Shares rallied 8% on May 12 after the deal was announced, giving Amazon the highest jump among the Magnificent Seven stocks that day. The stock gained 11% overall in May, its first positive month of trading since January. Shares are down 4% overall in 2025.
Amazon stock is in a cup-with-handle base with a 214.84 buy point, according to IBD MarketSurge. Shares closed about 3% below that entry on Thursday.
Amazon Stock: 2025 Revenue Target Estimate
Amazon's growth estimates from Wall Street have decreased from the start of the year, however. The tech giant beat sales and earnings estimates with its Q1 results. But it gave lower-than-expected operating income guidance.
Analysts project, on average, that Amazon's revenue will grow 8.9% to $694.6 billion this year, according FactSet. That's down 1.7% from the $706.9 billion projected at the start of 2025. Amazon earnings per share for the year are seen growing 12% to $6.19. That's down less than 1% from the $6.23 EPS projection at the start of the year.
Despite the uncertainty, e-commerce stocks have actually outperformed this year. The 59-stock Retail-Internet industry group tracked by IBD ranks 10th among 197 industry groups, based on six-month price performance. The overall group is up 8% year-to-date. However, that has been driven by strong gains from international players such as MercadoLibre, Sea Ltd. and Alibaba Group.
Still, Amazon is pitching itself to investors as a good bet to emerge a winner among retailers in the current tariff environment. Jassy has said Amazon stock gained market share during similar times of disruption, such as the Covid-19 pandemic.
"Given our really broad selection, low pricing and speedy delivery, we have emerged from these uncertain eras with more relative market segment share than we started and (are) better set up for the future," Jassy told analysts on the May 1 conference call. "I'm optimistic this could happen again."
Hoping For 'Digestible' Tariffs
The S&P 500, meanwhile, turned positive year-to-date following the China deal, after sinking to as low as a 18% year-to-date loss on April 8. The index was up 1.5% as of Wednesday.
It helped that other megacap technology stocks joined Amazon stock in posting big rallies in May. Meta Platforms added 18%. Nvidia gained 20%. Microsoft jumped 16% for the month.
Matt Stucky, chief portfolio manager for equities at Northwestern Mutual Wealth Management, said stocks took a big hit from the first wave of tariffs.
The current tariff environment is closer to what the market was expecting, he added. The return to a "base case" could allow investors to focus more on the pro-growth measures such as tax cuts that drove the market rally after Trump was elected.
"There is the view that the U.S. economy can digest this," Stucky told IBD. "It may be a couple of quarters of downward pressure on growth and upward pressure on price, but is digestible."
