Trump’s Tariffs vs. Alibaba Stock: The Billion-Dollar Showdown You Can’t Ignore

Tariffs are back—and this time, they're gunning for China's e-commerce giant. Here's how Alibaba's stock could take a hit—or dodge the bullet entirely.

The Trade War Flashpoint

Trump's latest tariffs threaten to squeeze Alibaba's cross-border revenue streams. Analysts whisper about a 15-20% downside risk if tensions escalate—but the tech titan's got tricks up its sleeve.

Alibaba's Counterplay

From shifting supply chains to leveraging its cloud division, BABA isn't just sitting ducks. Their Southeast Asian expansion might just bypass U.S. trade barriers altogether.

Wall Street's Cynical Bet

Meanwhile, hedge funds are already placing bets—because nothing juices portfolio returns like geopolitical chaos dressed up as 'risk management.'

E-commerce: Relatively tariff-resistant

Guess how many times Alibaba's executives mentioned tariffs during the company's latest quarterly earnings call? Pat yourself on the back if you answered zero. The only reference that came even close was CEO Eddie WU's mention of "potential uncertainties in global trade regulations."

I think there's a reason why Alibaba's management didn't focus on tariffs like many of their U.S. counterparts. The company generates around 57% of its total revenue from its e-commerce businesses. However, three-fourths of the company's e-commerce revenue comes from its Taobao and Tmall Group operations. These units serve the Chinese market, which wouldn't be directly affected by U.S. tariffs on Chinese imports.

Granted, Alibaba's international digital commerce group contributed roughly 14% of total revenue in the first quarter of 2025. Exactly how much of that revenue stems from the U.S. is uncertain. However, it's fair to say that the company's e-commerce business is relatively (although not completely) tariff-resistant.

Perhaps the greatest impact on Alibaba from Trump's tariffs is an indirect one. The Chinese customers and businesses that use its platforms could feel the pain from retaliatory tariffs imposed by the Chinese government on imports from the U.S.

Cloud services: Tariffs aren't a big issue

Although e-commerce remains Alibaba's biggest revenue source, the company's most important growth driver is its cloud services business. The artificial intelligence (AI) tailwind enjoyed by U.S.-based cloud titans is blowing for Alibaba Cloud, too.

Will U.S. tariffs hurt Alibaba Cloud? Probably not much. For one thing, Alibaba doesn't provide cloud services to customers in the U.S. Even if it did, the tariffs discussed so far apply only to imported products but not services. It's possible, though, that U.S. tariffs could hurt some of Alibaba's Chinese business customers and result in their cutting back on spending for cloud services.

Image source: Getty Images.

While tariffs shouldn't be a big issue for Alibaba Cloud, other TRUMP administration trade policies might be a different story. For example,(NVDA -0.82%) was temporarily barred from shipping any H20 GPUs to China. Although the White House later allowed the company to resume exporting the chips to China, there's no guarantee that further restrictions won't be imposed.

Of course, Alibaba could use other chips to power AI applications. However, Nvidia is an important partner and will likely continue to be as long as its GPUs remain the gold standard for training and deploying AI models.

Overall tariff impact on Alibaba

When all things are considered, President Trump's tariffs could affect Alibaba in some ways, but the Chinese tech giant should be largely unscathed. This assumes, though, that the final tariffs levied on China don't go radically beyond what has been proposed thus far.

Alibaba's greatest threat arguably comes from the Chinese government rather than from the U.S. government. The company's 20-F filing to the U.S. Securities and Exchange Commission acknowledges several ways the government in its home country could negatively affect its business.

These risks are partly to blame for Alibaba's low valuation. Its shares trade at only 14.3 times forward earnings, a much lower multiple than the company's U.S. counterparts. I think this valuation makes the stock a solid pick for long-term investors who aren't overly risk-averse.