Donald Trump won’t hesitate to impose tariffs when he returns to the White House in 2025. He stated his intention to impose tariffs of 10% to 20% on imports and tariffs of 60% to 100% on Chinese goods. Whether these statements should be taken literally or considered a negotiating tactic remains to be seen. The stock market is not taking risks and is already pricing Chinese stocks in a worst-case scenario.
However, shutting down all Chinese businesses entirely may be an overreaction, as some will not be affected by the additional tariffs. Here are two Chinese stocks that won’t get hurt and are worth buying during the dip, and two Chinese stocks that won’t get hurt.
Alibaba: The E-Commerce Stock to Avoid Unless It Gets Too Cheap to Ignore
Investors in Chinese stocks have been on a roller coaster ride as Chinese stocks rose on a new stimulus frenzy for China’s economy and now crash on concerns over Trump’s tariffs. E-commerce giant Alibaba Group Holding Ltd. New York Stock Exchange: BABY This is a case in point. Its shares rose 38% from $85 to $117.82 on the China stimulus rush in September, but collapsed to $83.13 on November 22, 2024 due to a disappointing $1.4 trillion stimulus package and potential Trump tariffs .
How much of Alibaba’s revenue comes from the US? Minimum 1%
Alibaba is known for its e-commerce and cloud computing businesses. Most of the e-commerce revenue comes from China. However, its international income continues to grow annually. Alibaba is expected to generate $60 billion in revenue in China and $14.1 billion internationally in 2024. In the first six months of 2024, Alibaba generated $29.34 billion in e-commerce revenue in China and $6.4 billion in international e-commerce revenue.
In the third quarter of 2024, Alibaba’s total revenue was $33.7 billion. Chinese e-commerce revenue, mainly from Tmall and Taobao, was $13.5 billion, and international e-commerce revenue from the AliExpress and Trendyol platforms was $3.38 billion. The company does not report results by region. Alibaba.com is a B2B website that combines its revenues with its international segment.
A Statistica survey conducted in August 2023 found that 11% of AliExpress buyers were from the United States. Assuming 11% of AliExpress’s third-quarter revenue, or $371.8 million, came from the U.S., that would represent less than 1% of total quarterly revenue. This will have minimal impact on Alibaba, but concerns about a 60% to 100% import tax could still hold back the stock. Additionally, there is no data on how much US revenue is generated through a B2B website. Sentiment often dictates price; so consider avoiding it.
PDD Holdings: Temu.com’s growth makes it necessary to avoid this
Chinese social e-commerce platform operator PDD Holdings Inc. NASDAQ: Traffic rules saw Pinduoduo become so successful that it launched an international version called Temu.com. Temu’s popularity in the US has skyrocketed thanks to incredibly low prices, gamification of the apps, social media influencers and a marketing campaign.
According to ECDB, in 2023 the topic was generated by $6 billion in sales from the USwhich accounted for 43% of gross sales volume (GMV). US incomes are estimated to grow by more than 50% in 2024. PDD’s total revenue in 2023 was $34.9 billion. E-commerce sales in the US accounted for 5.8% of total revenue. The topic has also received backlash over claims that its app poses a threat to national security. The combination of tariffs and regulatory risk puts PDD Holdings on the exception list.
JD.com: Amazon.com in China remains on its path – Chinese market
So far we have looked at Chinese e-commerce businesses. JD.com Inc. NASDAQ: JD is the largest retailer in China, often called Amazon.com Inc. NASDAQ:AMZN China. JD.com mainly serves Chinese customers in China and abroad. They have warehouses in the US to improve logistics when delivering goods to Chinese customers in the US.
JD.com’s e-commerce divisions cater to Chinese customers as they don’t even have an official English version of their website. Prices are in RMB and descriptions are in Chinese. Alibaba has a larger international presence in this department. JD.com doesn’t indicate that its revenue is broken down by region, so it’s best to assume that they don’t generate any significant e-commerce revenue in the United States. That’s why its stock is performing better than China’s global e-commerce stocks. JD shares are trading up 20% YTD, PDD is down 31.6% YTD, and BABA is up 7.2% YTD. Due to the lack of significant e-commerce revenue in the US, Trump’s tariffs should not affect JD.com.
Li Auto: Selling smart EREVs in China and outside the US
Chinese new energy vehicle manufacturer Lee Auto Inc. NASDAQ: LEE profitable and growing in China. The car, tire and truck company has found the right formula to solve the major problems of electric vehicles (EVs), range and charging concerns. Li Auto extended range electric vehicles (EREVs) also feature a motor that is used solely to recharge the battery. This allows their EREV, like its luxury L9, to range up to 877 miles, compared to 174 miles on the battery alone. Drivers will no longer have to worry about lack of power while driving an electric vehicle. The company just passed its millionth vehicle delivery and continues to grow. Its first all-electric car, the Mega, received a lukewarm reception, prompting the company to suspend production of its second-ever electric car until the second half of 2025.
100% tariffs no longer allow Li cars to be imported into the US
Li Auto does not sell its cars in the US due to the current 100% tariffs on Chinese cars. The company does not plan to enter the US markets, but is expanding into Europe. Any further Trump tariffs will not affect Li Auto.
Before you consider Alibaba Group, you should hear this.
MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts were quietly telling their clients to buy now, before the broader market caught on… and Alibaba Group wasn’t on the list.
While Alibaba Group currently has a Moderate Buy rating among analysts, the top-rated analysts consider these five stocks to be Strong Buys.
View five stocks here
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