Meta and Amazon at risk as tariffs threaten Chinese advertising ecosystem
Meta and Amazon are among the largest casualties of former President Donald Trump’s recently announced baseline 10% tariff on all imports. China will be subject to an even steeper 54% levy. The announcement sent tech stocks tumbling, and analysts warned of far-reaching disruptions rippling through the digital advertising landscape, retail media, and supply chains more broadly.
The broad tariffs, which cover all products entering the U.S. from abroad, are a distinct danger to companies like Meta and Amazon, which increasingly depend on advertising by Chinese sellers and brands.
Meta, for instance, has about $10 billion in revenue from international advertisers, mostly from China, according to veteran advertising analyst Brian Wieser. Amazon is also exposed, however, because the Chinese merchants that dominate its marketplace are responsible for almost half of its top sellers. Many of these sellers use Amazon’s advertising ecosystem to target their products to American shoppers, an industry now threatened with disruption.
“The biggest losers you’re going to see right now are companies based on Chinese-based advertising: social media and retail media,” said Eric Haggstrom, director of market intelligence at Advertiser Perceptions. He added that the most immediate effect would probably be in categories such as apparel and home goods, where Chinese sellers are a linchpin.
Digital Ad ecosystem faces disruption as tariffs impact spending and shift priorities
Ad analysts say the tariffs will send shock waves throughout the digital advertising ecosystem. With many consumer products manufactured in China and Vietnam, companies such as Meta and Amazon advertisers might trim spending amid higher prices.
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However, establishment ad-driven platforms, including Meta, Amazon, and Google, are said to be resilient thanks to their scale, precise targeting, and ability to deliver results that can be measured. “The retail media outlets are just going to continue to win,” said Nadja Bellan-White, the CEO of M+C Saatchi Group. However, she said that advertisers will expect clearer return-on-investment guarantees now.
Pinterest, Reddit, and Snap may be at the most risk because they lack the scale and familiarity among advertisers that Meta and Google have, according to analysts at NewStreet Research. Reddit, in particular, has niche communities that are more difficult for brands to reach, making it potentially an easier ad budget cut.
Media giants and digital platforms face economic uncertainty as tariff impact looms
Non-tech giants are bracing for fallout, too, as media and entertainment companies react to the news. Disney, Warner Bros. Discovery (WBD), and Netflix were all mixed after the tariff announcement, with their stocks diving. Morningstar analysts warned that weakness in the economy caused by the trade war could weigh on consumer spending, which would hurt companies that depend on both direct consumer purchases and advertising revenue.
Disney’s theme parks and experiences business, a big driver of profits, may feel the pinch if a recession follows the implementation of the tariffs, which could lead attendance to decline. Its streaming business is growing, which might soften the blow somewhat. Likewise, WBD’s recent streaming gains could offset ad-driven losses, though it carries a heavy debt burden and is therefore more vulnerable to tightening credit markets.
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While Netflix does not depend on physical goods, it may experience slower growth in Europe if retaliatory tariffs arise. Bernstein analysts flagged the threat of Europe responding with measures that could hurt Netflix’s dominant position in the continent’s biggest streaming markets.
Among the biggest uncertainties surrounding the tariffs is what happens with TikTok.
Known as the Tariff Man, Trump has teased that he could use the tariffs to push China into permitting the app’s sale. TikTok has made some strides in demonstrating its effectiveness as an advertising platform. However, many brands still appear hesitant to invest in the platform, presumably due to fear of regulatory scrutiny and the possibility of a ban in the U.S.
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