Is Amazon’s (NASDAQ: AMZN) Pullback Done at 20%?

Amazon's stock price (NASDAQ: AMZN) has faded after a strong start to the year, down 10.90% YTD, having retraced 20% from February highs to March lows. The realities surrounding potential implications of tariffs have not been lost on markets despite the 1.75% gain in this morning's pre-market.

Billionaire investor Mark Cuban has recently expressed concerns about the effects of the United States' new trade policies on the firm's global supply chain. The new policies, particularly the introduction of reciprocal tariffs, could significantly impact Amazon.

Mr Cuban notes that these policies could increase operational costs by removing the current $800 de minimis exemption, which permits small shipments to enter the U.S. duty-free. This exemption plays a critical role in maintaining low overheads for Amazon's vast import operations.

While Cuban is not against the use of tariffs, he emphasises their strategic application. He believes that they could potentially bolster domestic industries if applied judiciously. However, he warns that using tariffs as a substitute for taxes on overtime, social security, and tips would necessitate significantly high tariffs, potentially placing an undue burden on lower-income individuals.

Cuban also reflects on the past impacts of tariffs during the Trump administration, which he critiqued for causing economic difficulties in supportive regions. This historical context sheds light on the broader socio-economic impacts of such trade policies. The implementation of retaliatory tariffs affected industries employing about 7.75 million people, with over half of these jobs located in counties that supported Trump.

Amazon's profit margins, driven largely by Amazon Web Services which accounted for 74% of its revenue in 2024, could face pressure if the supply chain is disrupted.

With new trade policies poised to address trade imbalances coming in on April 2nd, there could be shifts in the days ahead. Volatility is likely until the ramifications and detail becomes clear and fixed, allowing market to properly assess the impacts expected for various segments of the economy.