Shares of Alibaba (BABA 1.78%) are tumbling on Friday. The company's stock lost 11% as of 1:50 p.m. ET and as much as 13.9% earlier in the day. The decline comes as the S&P 500 and Nasdaq Composite fell sharply.
As the fallout from President Donald Trump's tariffs continues to pummel markets, his latest executive order directly targets a key advantage of Chinese e-commerce platforms like Alibaba.
De minimis no more
Trump signed an executive order on Wednesday that ends the de minimis tariff exemptions for packages up to $800 from China and Hong Kong. This meant that all shipments coming into the U.S. will be subject to Trump's tariffs no matter their value. The de minimus exception spared much of what U.S. consumers were purchasing from Alibaba's website.
The White House said that Chinese companies like Alibaba engaged in "deceptive shipping practices" and that many "hide illicit substances, including synthetic opioids, in low-value packages to exploit the de minimis exemption."
According to U.S. Customs and Border Protection, de minimis shipments into the United States ballooned to 1.36 billion last year, up from just 139 million in 2015 as the market was filled with goods from the company and its competitors, Temu and Shein.
This is a big shakeup for Alibaba and will materially impact its business. Alibaba's ability to adjust its cross-border model will be crucial for maintaining a competitive position. Given all of the uncertainty, I would hold off on investing further in Alibaba for now.
