On Feb. 20, the Supreme Court ruled that President Trump lacked the legal authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). That ruling, which nullifies most of the Trump Administration's previous tariffs, lit a fire under many retail stocks.
Two such stocks were Amazon (AMZN 1.47%) and PDD (PDD 1.28%), which rose 3% and 4%, respectively, after the Supreme Court's ruling. Let's see if those gains are sustainable.
Image source: Getty Images.
Why did Amazon and PDD rally?
Amazon, the world's largest e-commerce company, generated 24% of its net sales from its third-party seller services in 2025. Many of those third-party sellers are based in China. PDD, the third-largest e-commerce company in China, allows its Chinese merchants to sell their products internationally (especially in America) via its cross-border marketplace Temu.
Therefore, the elimination of the Trump Administration's tariffs on China under IEEPA -- including its "emergency" 10%-20% tariffs and baseline reciprocal tariffs -- will enable Chinese sellers on Amazon and Temu to cut prices and attract new shoppers again.
NASDAQ: AMZN
Key Data Points
But are those gains sustainable?
That seems like a green flag for Amazon and Temu, but they're not out of the woods yet. The Supreme Court ruling doesn't reinstate the "de minimis" rule, which previously exempted overseas shipments valued at less than $800 from tariffs. Amazon and Temu both profited from that rule, which facilitated low-cost cross-border sales from China to the U.S.
The Trump Administration eliminated the de minimis rule last August -- forcing customers to pay tariffs on each product entering the U.S., regardless of its monetary value. Those higher costs and extended shipping times made it less appealing to buy products from China.
Another issue is the Trump Administration's implementation of a new "global" 15% tariff under Section 122 of the Trade Act of 1974 in response to the Supreme Court's ruling. Those tariffs can last up to 150 days, after which Congress would need to approve any extension. That new tariff offsets the potential gains for Amazon and Temu's cross-border sellers.
Investors shouldn't expect significant near-term gains
Amazon, PDD, and other retail stocks rallied in a knee-jerk response to the Supreme Court's ruling, but not much has changed. Overseas cross-border merchants might pay slightly lower tariffs (based on the product and country of origin). However, the de minimis rule remains shelved, and they'll still need to navigate the Trump Administration's latest "global" tariffs.
