Amazon (AMZN) stock is up 2% after the Trump administration agreed to maintain the “de minimis provision” that allows small packages valued at less than $800 to enter the U.S. duty free.
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There had been concern that placing duties, or tariffs, on packages worth $800 or less would hurt shipments from U.S. e-commerce companies such as Amazon, eBay (EBAY), Etsy (ETSY), and others. The stocks of EBAY and ETSY are also higher on news that the duty free exemption will remain in place.
The Trump administration said in a statement that the duty free de minimis status will remain in place until “adequate systems are in place” for the U.S. Commerce Department “to fully and expediently process and collect tariff revenue.” Removing the provision and placing duties on small packages was initially part of Trump’s announcement of 10% across-the-board tariffs on Chinese imports.
China Factor
Removal of the duty free status on packages worth less than $800 was aimed at hurting low-cost shopping sites from China that sell everything from clothes to furniture. The move was expected to impact Chinese e-commerce sites such as Shein, Temu and Aliexpress. However, the new tariffs were also going to hit Amazon, eBay, and other U.S. e-commerce sites, as well as American small businesses.
Chinese e-commerce sites have acknowledged that they built their massive businesses around the duty free status placed on small packages. The tax exemptions on cheap products has allowed more than a billion packages to pour into the U.S. at a low-cost for consumers who are on the hunt for deals.
Economists and analysts had warned that removal of the de minimis provision would overwhelm U.S. Customs. More than 80% of U.S. e-commerce shipments are for goods valued at less than $800. Some analysts say the Trump administration’s reversal is a case of market realities meeting political proposals.
AMZN stock has gained 35% over the last 12 months.
Is AMZN Stock a Buy?
The stock of Amazon has a consensus Strong Buy rating among 47 Wall Street analysts. That rating is based on 46 Buy and one Hold recommendations issued in the last three months. The average price target on AMZN stock of $267.13 implies 14.71% upside from current levels.
