By Katherine Hamilton

Amazon.com shares fell further Monday as investors worry the retailer's close ties to China could make it more vulnerable to tariffs.

The online retailer has a particularly high exposure to China compared with competitors such as Walmart, putting Amazon at higher risk of losing sales with third-party merchants and advertisers, analysts said. The company also hinted at lighter sales before the tariffs were implemented, which could unravel further due to trade and economic turbulence.

"While Amazon sales seemingly felt little impact from 2018 China tariffs, the widespread (and much larger) 2025 global tariffs are a potential new ballgame for supply chains and costs," Bank of America analysts Justin Post and Michael McGovern said in a note.

In February, Amazon forecast a lower-than-expected sales outlook for the first quarter of $151 billion to $155.5 billion. The early signs of a slowdown before tariffs were implemented are now giving investors pause about Amazon's ability to withstand new trade challenges.

Investors are wondering whether that guidance took into account higher costs from tariffs, and how Amazon will factor changing trade policies into future estimates, Post and McGovern said. Analysts polled by FactSet have cut their expectations for sales to $155.02 billion, down from a January estimate of $158.61 billion.

Meanwhile, rivals such as Walmart have shown stronger sales growth and appear more resilient. Walmart sells more groceries than Amazon, a segment that is expected to stay strong through a potential economic downturn. And Amazon has a higher exposure to China--where some tariffs on imports are as high as 245%--because it provides a platform for third-party sellers, many of whom are Chinese, Raymond James analyst Josh Beck said in a note.

Amazon's close ties with China spill over into its advertising business. The company has said a "significant" share of its advertisers are Chinese, and analysts anticipate those advertisers will pull back in the U.S. due to tariffs. About 14% of Amazon's ads are linked to Chinese companies, compared with 11% at Meta Platforms and 6% at Alphabet Inc.'s Google, Beck estimates.

There is still hope: Chief Executive Andy Jassy said in a CNBC interview earlier this year he wasn't seeing changes in consumer behavior, and there is a chance the Trump administration will solidify a deal with China to lower tariffs. But analysts and executives expect consumers and companies to start spending less as fears of a recession grow, which could result in smaller investments in Amazon's non-retail sectors such as Amazon Web Services.

Amazon shares fell 4%, to $165.82, midday Monday, adding to a 24% decline this year.

Broader macroeconomic concerns dragged down other "Magnificent 7" stocks, with Tesla slipping 7%, to $225.38; Nvidia declining 5%, to $95.99; and Meta down 4% to $482.67. Apple Inc., Microsoft and Alphabet all fell around 3%.

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

April 21, 2025 14:03 ET (18:03 GMT)

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