US-China Tariff Rollbacks: Navigating the Logistics and Retail Recovery

The U.S.-China tariff saga has reshaped global trade flows in 2025, with ocean imports from China plunging 28.5% in May as businesses braced for a 145% tariff regime. Yet the May 2025 announcement of a 90-day tariff reduction—cutting U.S. rates to 10% and China's retaliatory measures to 55%—has injected hope into a sector teetering on collapse. For investors, this volatility creates a unique opportunity to identify logistics firms and retailers positioned to rebound as supply chains stabilize. Here's how to navigate the recovery phase.

The Tariff Timeline: Chaos and Clarity

The May 2025 data from the National Retail Federation (NRF) paints a stark picture: U.S. ports handled just 1.81 million TEUs in May, a 12.9% year-over-year decline—the first such drop in 19 months.

However, the 90-day tariff truce ending August 12 has unleashed pent-up demand. June's projected 1.71 million TEUs (a 20.2% drop) mask a temporary surge as shippers frontload cargo to exploit lower tariffs. By August, volumes are expected to rebound to 1.82 million TEUs, before facing renewed uncertainty as the truce expires.

The tariff framework remains complex. While headline rates fell, overlapping duties (Section 301, 232 tariffs, etc.) still leave effective rates at 55%—a far cry from pre-tariff levels but a lifeline for businesses. This creates a “sweet spot” for investors: companies agile enough to capitalize on short-term rebounds while preparing for long-term tariff volatility.

Logistics: Flexibility Rules the Supply Chain

The logistics sector is the linchpin of this recovery. Companies with nimble supply chains and exposure to e-commerce growth stand to benefit most.

1. XPO Logistics (XPO): The Undervalued Winner

XPO's focus on last-mile delivery and domestic e-commerce infrastructure positions it to capture demand as retailers restock. Its acquisition of KLL Logistics in 2024 gave it a foothold in Asian supply chains, enabling cost-efficient rerouting of cargo. With a P/E ratio of 12.5 (vs. sector average 18), XPO offers a discount for its multi-modal expertise.

2. Canadian Logistics Firms: Geopolitical Hedges

Investors seeking diversification should consider Canadian firms like Brampton Logistics. Their proximity to U.S. markets and access to NAFTA-protected trade routes insulate them from China-U.S. trade wars. Their exposure to automotive and tech sectors—critical for hybrid sourcing models—adds defensive value.

3. FedEx (FDX) and JB Hunt (JBHT): Scale and Specialty

FedEx's global network allows it to capitalize on trans-Pacific rerouting, while JB Hunt's truckload expertise mitigates congestion at ports like L.A. Both stocks trade below their 52-week highs, despite strong demand for domestic freight.

Retail: Restocking and Margin Recovery

Retailers with China-sourced supply chains now face a “buy now or pay later” dilemma. The tariff truce creates a window to replenish inventories at lower costs, but lingering uncertainty demands cautious optimism.

1. Walmart (WMT) and Target (TGT): The Big Box Rebound

Both giants slashed imports during peak tariffs, but their vast scale allows them to negotiate lower prices with Chinese suppliers as demand stabilizes. A shows a 15% drop in turnover, signaling room to rebuild stock. Their dividend yields (WMT: 1.2%, TGT: 0.9%) offer downside protection.

2. E-Commerce Giants: Amazon (AMZN) and the Margin Boost

Amazon's reliance on Chinese-manufactured consumer goods (electronics, apparel) makes it a prime beneficiary of tariff relief. A 15% cost reduction in textiles (from 19% to 16% post-tariff) directly improves margins. While AMZN's valuation remains high, its Prime ecosystem's stickiness justifies its premium.

3. Discount Retailers: Dollar General (DG) and Ross Stores (ROST)

These names thrive on affordability—critical as tariffs ease. DG's focus on low-cost apparel and home goods aligns with the 55% tariff regime's lingering affordability challenges, while ROST's inventory turnover (now 4.2x vs. 5.1x in 2023) signals pent-up demand for off-price retail.

Risks and Caveats: The Tariff Ceiling

The 90-day truce is not a permanent solution. A Trump-era proposal to raise tariffs to 60% on Chinese goods looms, while unresolved issues like semiconductor IP disputes and Taiwan tensions could reignite volatility.

Investors should prioritize companies with:
- Hybrid sourcing models: Firms using Vietnam/Mexico for final assembly to exploit tariff loopholes.
- Inventory buffers: Retailers with 6–9 months of stock can weather another shock.
- Geopolitical hedging: Diversification into Canadian or Southeast Asian supply chains.

The Investment Thesis: Buy the Dip, Hedge the Risk

The May-June import slump is a buying opportunity for logistics and retail stocks undervalued by near-term tariff fears. Key entry points:

1. Logistics: XPO Logistics (XPO) for e-commerce resilience; Canadian logistics ETFs (e.g., XCPT) for geographic diversification.
2. Retail: Walmart (WMT) and Amazon (AMZN) for scale; pair with inverse ETFs (e.g., TQQQ) to hedge against tariff spikes.
3. Avoid: Steelmakers (US Steel) and semiconductor firms (ASML) exposed to non-tariff barriers like export controls.

Final Take: The Tariff Truce is a Bridge, Not a Solution

While the 55% tariff rate is a step back from the 145% peak, it remains a higher baseline than pre-2018 trade wars. Investors should treat this recovery phase as a tactical entry point—locking in gains before the next round of negotiations. The firms that thrive will be those that blend cost discipline with geopolitical agility, turning tariff chaos into market share.

The data is clear: the worst of the tariff-driven contraction is over. For the bold investor, this is the time to load up on logistics and retail stocks—and brace for the next chapter of trade diplomacy.