Tariffs are back — and the markets are reacting fast. While the Dow fell almost 4%, Walmart losses weren’t as severe.
Costco even ticked up. So what’s really happening here, and where should investors position?
Here’s the breakdown:
Walmart and Costco have massive scale and pricing power. They’ve been here before. During the inflation crisis, both gained huge market share by keeping prices low on essentials while others struggled. They’re doing it again.
Both companies are pushing suppliers hard to absorb the cost of tariffs — Walmart reportedly asked for up to a 10% cut per round of tariffs. That’s not popular with Chinese vendors, but Walmart places enormous orders and even runs Sam’s Clubs in China, which softens the blow of retaliation.
Walmart still imports a lot from China — estimates say 60% of its U.S. imports come from there. But it also benefits from:
- A higher percentage of U.S.-made goods (around 20%),
- A big grocery business that mostly avoids tariffs,
- And a customer base that shops for essentials, not luxuries.
That said, Walmart is still exposed. Over 60% of its imports into the U.S. come from China, and now Vietnam is facing a 46% tariff. That matters — Walmart sources a lot of apparel, furniture, electronics, and low-cost goods from Vietnam and China.
India and Indonesia are also key supply hubs for textiles, footwear, and furniture. If tariffs hit there next, Walmart and Costco could both feel it — but again, their scale gives them options.
Walmart cater to price-sensitive shoppers who notice even a $0.50 hike.
So, the pain is real — but not as bad as for others.
Companies like Target — more reliant on discretionary goods — are taking bigger hits. Target can’t get its footing after its DEI program demise and a 40-day boycott against the retailer. Foot traffic at stores is down for the eighth consecutive week It’s the same story for smaller import-heavy retailers, like:
Five Below – imports cheap goods, low pricing flexibility.
Burlington Stores – limited margin and pricing power.
Skechers and Crocs – big exposure to Vietnam/China.
The Children’s Place – apparel tariffs hit hard.
Lululemon – global supply chains, premium perception, but exposed.
Deckers – strong brands like UGG, but reliant on Asia and less pricing cushion than luxury brands.
These companies either raise prices — and risk losing customers — or take the margin hit. Either way, they suffer.
Meanwhile, Costco looks solid. Their bulk-buying model means fewer suppliers, bigger orders, and more leverage. Same goes for Dollar General, which relies more on domestic sourcing and smaller, cheaper goods.
Meanwhile, Costco is in a stronger position. They place huge orders with fewer suppliers, giving them bargaining power. They also focus on staples and bulk essentials — less exposed to discretionary demand and more resilient in a cost-push environment.
Dollar General also holds up well — more U.S.-sourced goods, fewer tariff-sensitive categories, and loyal rural shoppers.
📊 So what’s the smart investor move?
- Go long on Costco and Dollar General — they’re best positioned to navigate global tariffs and inflation.
- Hold or underweight Walmart — still solid, but faces more exposure to tariff-hit countries like China and Vietnam.
- Go short on Target and the smaller, import-heavy retailers mentioned above. They have the least flexibility and highest risk of margin compression or earnings misses.
Bottom line: Tariffs aren’t just a China story anymore. With Vietnam, India, and others on the radar, retailers that depend on global imports — especially smaller ones — are in the danger zone. Stick with the giants that can throw their weight around.
Next, I’ll talk about Best Buy and McDonald’s.