Walmart (WMT), Amazon (AMZN) and Costco (COST) are the three largest retailers in the U.S., doing over $900 billion in combined sales in the last full calendar year (2023). Of those three companies, COST has been the hands-down winner, rising 237% since the end of 2019 and beating both WMT’s (still impressive) 134% gain and Magnificent 7-member AMZN’s 160% returns.
Owning any of the three biggest retailers would have been a wise decision over the last five years, albeit for very different reasons.
Walmart is a ubiquitous low-priced retailer that’s been thriving during a time of rising prices, Amazon has ridden the AI/tech wave as much as it’s benefitted from retail sales, and Costco offers low bulk pricing that fosters a cult-like fandom for the wholesaler.
But despite those differences, each company faces some headwinds in the form of (more) proposed tariffs on imported goods in 2025.
So, let’s take a look under the hood of the retail landscape and see which companies are best suited to weather the tariff storm.
Retail Sales by Walmart, Amazon, and Costco
First off, the breakdown of that $900 billion-plus in (domestic) sales is a little lopsided, as Walmart sold $534 billion in goods in 2023, Amazon sold $250 billion, and Costco sold a comparatively meager $175 billion in goods.
It’s also worth noting that comparisons to Amazon are a little apples to oranges, as Amazon is more than five times the size of Costco (market cap of $2.4 trillion for Amazon vs. a market cap of $435 billion for Costco) and triple the size of Walmart ($756 billion market cap).
The company also offers a wide array of services, from Amazon Web Services to Prime Video streaming to their newly launched quantum computing efforts.
To wit, only about 40% of Amazon’s income is derived from retail sales, and of those sales, 60% come from independent resellers.
In other words, Amazon’s model is far less reliant on buying goods for sale and much more reliant on warehousing and distributing goods, making them (or their retail operations) more of a tollbooth.
Tariffs could certainly prompt higher prices at Amazon, by the company or its sellers, but given their diverse mix of revenue and high correlation to tech, the biggest threat to the stock isn’t marginally higher import costs.
Walmart and Costco are a different story.
From 2020 through 2022, 16.5% of U.S. retail goods were imported from China.
In the first half of 2023, that number dipped to 13.3% and, given the current political climate, it has probably continued drifting lower (second-half 2023 and 2024 numbers aren’t available).
But even with the dip, the majority of both Walmart and Costco’s imports come from China. Costco doesn’t offer a granular breakdown of the dollar amount, but 89% of their total import shipments came from China in 2024.
Of Walmart’s imports, on the other hand, only about 60% come from China, which is down from 80% a few years ago as they’re increasingly leveraging India in their supply chain.
So, even as the U.S. and these companies become less reliant on China, the country remains the primary source of imports for both Costco and Walmart.
A broad-based tariff regime threatens to raise prices for each of these mega-retailers that will have to (in some form) be passed on to their shoppers.
However, the companies’ respective business models give one a clear advantage.
Costco’s (COST) Model Is a Clear-cut Advantage
As a low-cost retailer, Walmart has risen to the top on the back of low prices, effectively squeezing out other retail establishments by offering everyday essentials at already bare-bones prices.
Walmart shoppers expect to get the lowest prices on the items that they have to have.
Costco, on the other hand, generates about 10% of its income from membership fees and has built a reputation for “treasure hunting.” Members buy their essentials at Costco, sure, but many of the specialty offerings are already a function of where (and from whom) Costco can get the best prices.
Costco may not be a go-to for pergolas, lawn furniture, jeans, books, or assorted sundries, but the company offers them up when it makes economic sense to do so.
In a high-tariff environment, where retailers are actively looking to diversify their supply chains, Walmart has to find replacement equivalent items, whereas Costco can simply continue to replicate a formula that is already working (with perhaps more of an eye on price).
Both companies are massive and have unmatched pricing powers based on volume, but Costco’s membership revenues and their whack-a-mole offerings give them an added buffer to avoid disruptions if import prices start rising.
Any of these three mega-retailers would have been great to own for the last five years, but Costco’s model makes it the strongest pick for the next five as well.
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