Stiff and unpredictable tariffs aren't exactly good news for retail giant Costco Wholesale (COST -0.35%), but they could actually help the company in a relative way. Here's why I would call the spiking tariffs a green flag for Costco and its shareholders.

Tariffs aren't great for Costco, but even worse for its rivals

I don't think you'll see Costco's management tout the tariffs as helpful any time soon. The company's focus on selling high-quality goods at a low price is strictly opposed to rising and unstable item prices. Indeed, management spent a lot of time on the last earnings call discussing Costco's tariff mitigation efforts, but never even suggested that the trade tensions could be a net positive catalyst for the company.

At the same time, I see several ways this global trade environment might work to Costco's benefit. You see, this particular type of pressure is best met by some of Costco's strongest qualities:

• Its scale lets Costco push vendors to absorb more of the cost hit than smaller retailers.
• With fewer unique items on the store shelves, Costco can reprice and pivot sourcing faster than most.
• Price-sensitive shoppers will probably choose Costco more often if the recently activated tariffs result in costly inflation.
• The company's profit margins were always slim, but supported by the lucrative and ultra-predictable membership fees.
• Imagine shoppers visiting Costco (or its online store) just to compare prices against Walmart (WMT -0.64%) and Target (TGT -1.19%). These curious peeks could very well inspire more membership sales.
• The popular Kirkland Signature store brand can dodge tariff effects by selecting local production partners or other lower-tariff sources more often.

Image source: Getty Images.

A relative edge for Costco investors

So tariffs will add to Costco's expenses and make its operations less predictable for a while. But the same effects will apply to every rival, and often to a greater and more painful degree.

It's not a classic competitive advantage, but I see the current tariff trend as a green flag for owning Costco stock in 2025.