How well is Carvana positioned to withstand Trump’s 2025 tariffs?

Carvana Co (NYSE: CVNA) chief executive Ernie Garcia does not expect Trump’s new tariffs to have a “super direct” impact on his company’s nationwide business.

Speaking with CNBC this morning, Garcia agreed that higher tariffs will most definitely make cars more expensive in the United States.

However, much of that increase in prices will be restricted to the new vehicles only, since the “used cars are already there,” he added.

CEO Garcia’s remarks arrive a day after Carvana reported its financial results for the first quarter that handily topped Street estimates, pushing CVNA shares up nearly 10% on Thursday.

Trump tariffs could even prove a tailwind for Carvana stock

On “Squawk Box”, Ernie Garcia even argued that higher tariffs under the Trump administration could prove a tailwind for Carvana.

As the new trade policies push new car prices up significantly this year, more and more Americans will likely switch to used cars, potentially resulting in a significant boost to CVNA’s business, he added.

The chief executive expects Carvana to see a meaningful sequential increase in retail units sold as well as adjusted EBITDA in fiscal Q2.

Note that Carvana stock is up nearly 75% versus its low in early April at the time of writing.

Why else are CVNA shares insulated from new trade policies?

Carvana is insulated from tariffs even if they trigger a full-blown trade war in 2025, as it operates exclusively in the United States.

So, even if other countries, including China, announce aggressive retaliatory tariffs on American goods, it wouldn’t particularly affect CVNA’s business.

According to the company’s chief executive, Ernie Garcia, the online used car retailer is strongly positioned to weather Trump tariffs also because there aren’t a lot of substitutes to Carvana’s services in the US.

“If you sell something on Amazon, and there are 15 different options customers are choosing from, and your products go up in price, you’re not in a great spot,” he argued, adding that such is not at all the case with CVNA.

Carvana shares do not currently pay a dividend, though.

Is it too late to invest in Carvana in 2025?

Despite a massive surge in Carvana stock this year and a relatively high valuation multiple, Piper Sandler analysts remain as bullish as ever on CVNA shares for the remainder of 2025.

On Wednesday, the investment firm reiterated its “overweight” rating on Carvana stock and raised its price target to $315, indicating potential upside of another 10% from current levels.

According to Piper Sandler analysts, the New York-listed firm offers high-visibility growth and operating leverage at a time when the broader market is mired in uncertainty.

CVNA’s ability to sustain fundamental momentum was among the other reasons cited for the positive view in their research note on Thursday.  

The post How well is Carvana positioned to withstand Trump’s 2025 tariffs? appeared first on Invezz