BofA Securities analyst Justin Post noted Thursday that President Donald Trump announced a 90-day pause on reciprocal tariffs, keeping the 10% baseline in place. Per Trump, the pause comes after 75-plus countries called U.S. officials to negotiate trade agreements, even as he hiked tariffs on Chinese imports to 125% in response to China's 84% rate on U.S. goods.
The Nasdaq jumped over 12% as investors recalibrated tariff and recession fears. Talks are underway with key Asian partners like Vietnam (tariff at 46%), Japan (24%) and India (26%), with Treasury Secretary Scott Bessent set to meet them soon, per Bloomberg. While China tariffs remain a risk, broader negotiations could help online retailers stabilize supply chains.
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In the case where the Street can anticipate a resolution to all tariff issues over the next 12-18 months, Post noted the most significant opportunity for more discretionary names in his e-commerce coverage group — ACV Auctions Inc (NYSE:ACVA), Amazon.com Inc (NASDAQ:AMZN), RH (NYSE:RH), Wayfair Inc (NYSE:W) — that have been hardest hit over the past three weeks.
Amazon’s retail does have significant exposure to China (China sellers could be over 30% of third-party sellers), but pauses on tariffs in other countries will allow for product substitution. Key questions for first-quarter earnings and second-quarter outlooks will be to what degree consumers have pulled forward spending ahead of expected tariffs, and how much of a pass Street will give companies on second-quarter guidance.
As advertising spending is cyclical and depends, in part, on business confidence, Post expects some weakness in second-quarter brand advertising.
Post noted that the announced tariff pause could help soften the potential impact in the second quarter and drive some upside to his recently revised estimates, benefiting the entire sector.
Online media companies, including Pinterest Inc (NYSE:PINS), Reddit Inc (NYSE:RDDT), and Snap Inc (NYSE:SNAP), which have less robust ad auctions and/or higher brand exposure, likely have the most to gain from an improving macro outlook.
Of the three, Post preferred Pinterest for a reduction in tariffs, given its exposure to home goods and fashion with favorable risk/reward. He noted that the group — including Meta Platforms Inc (NASDAQ:META) and Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) — was up between 10% and 25% initially on the tariff pause news, but the stocks remain well below Feb. 14 levels.
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