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Tariffs Are Back, So Pricing Power Is All That Matters

Author

Noah Zelvis
February 25, 2026

A new global tariff is now part of the backdrop, and the market’s next obsession will be simple: who can keep margins intact.

Some companies can pass higher costs through without losing customers. Others can’t, and they will show it fast in guidance.

This edition is about owning pricing power and avoiding the thin-margin danger zone.

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The headline change is a new 15% global tariff on most imports, rolled out quickly after the Supreme Court knocked out parts of the prior tariff framework.

The details matter less than the impact: a broad cost shock that shows up in supply chains before it shows up in inflation prints.

Here is how this usually plays out in real life.

1) First, companies try to absorb it.
Retailers and importers eat some of the cost while they renegotiate supplier terms, reprice catalogs, and run down existing inventory. That buys time, but it compresses margins.

2) Then they start price testing.
You will see quiet price moves, fewer promotions, smaller package sizes, and more fees. The key is whether customers accept it or trade down.

3) Finally, the market separates winners from victims.
The winners have at least one of these advantages:

  • They sell essentials people buy anyway

  • They have strong brand loyalty

  • They have scale and procurement power

  • They can shift sourcing without breaking the business

The victims tend to share a pattern:

  • Thin margins

  • Import-heavy inputs

  • Weak differentiation

  • Customers who are already price sensitive

That is why the tariff story quickly becomes a pricing power story. Even a modest pass-through difference can swing earnings a lot when margins are tight.

There are also two important side notes.

This tariff does not hit everything equally. Some categories are carved out, and certain sector tariffs are already in place and do not stack.

Translation: this is not a blanket economic doom narrative. It is a company-by-company sorting event.

The de minimis loophole staying shut matters. Cheap, direct-to-consumer shipments do not get a free pass anymore.

That raises friction for ultra-low-cost cross-border sellers and nudges more volume back toward domestic retail channels that already have distribution networks and compliance built in.

So the playbook is straightforward. Own businesses that can defend margins and keep demand. Avoid those that have to choose between losing volume or losing profitability.

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Actionable Stuff

  • Chase pricing power, not headlines. Tariffs are the catalyst, margins are the outcome.

  • Favor essential demand and repeat purchases. Customers tolerate price moves better when the product is not optional.

  • Prefer scale advantages. Big buyers can negotiate better and spread costs across higher volumes.

  • Be careful with thin-margin retail and import-heavy brands. This is where earnings surprises go to die.

  • Watch guidance language. Look for phrases like cost absorption, promotional intensity, supplier renegotiations, and mix shift. Those are tells.

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Top Picks

AutoZone (NYSE: AZO)

If tariffs push up prices for new cars, appliances, and parts, consumers often delay big purchases and keep what they have running longer.

That is great for the auto-parts aftermarket. AutoZone benefits from the practical reality that repairs do not get canceled, they get prioritized.

It also has real pricing power because when your car is broken, you are not price shopping for three weeks, you are fixing it.

What to watch: Same-store sales, commentary on parts inflation, and whether DIY demand picks up as consumers stretch budgets.

Genuine Parts Company (NYSE: GPC)

Genuine Parts is another clean margin-defense story because it sits in distribution and replacement cycles across auto and industrial parts.

In tariff regimes, the winners often include the middlemen with scale and long relationships who can secure supply, manage price changes, and keep customers stocked.

GPC tends to benefit when customers value availability and service as much as price, especially when supply chains get messy.

What to watch: Industrial segment momentum, gross margin stability, and management commentary on sourcing and pass-through.

Church & Dwight (NYSE: CHD)

In a world where tariffs creep into everyday goods, households get pickier, but they do not stop buying essentials.

Church & Dwight sells staples that live in repeat purchase baskets.

This is where pricing power matters most because small price increases spread across huge volumes can protect margins without triggering a demand collapse.

Brands that feel like good value, not luxury, tend to handle this environment better.

What to watch: Volume versus price mix, promotional intensity, and margin trends as input costs shift.

Copart (NASDAQ: CPRT)

Tariff-driven cost shocks can do weird things to vehicle economics.

Higher parts costs, higher repair costs, and tighter used vehicle supply all change what insurers and repair shops decide to fix versus total out.

Copart benefits from that churn because it sits at the center of the salvage and vehicle remarketing ecosystem.

It is a way to play the downstream effects of inflation and tariffs without relying on consumers feeling good.

What to watch: Unit volumes, auction pricing dynamics, and any commentary on total-loss frequency trends.

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Bottom Line

A new tariff regime is not automatically a market crash signal. It is a profitability sorting mechanism.

Companies with pricing power, scale, and essential demand can defend margins and keep compounding.

Companies that rely on cheap imports and thin margins will get squeezed first, and their guidance will show it.

Stay invested, stay selective, and treat pricing power as the only superpower that matters until the cost picture stabilizes.

That’s it for today’s edition—thanks for reading! Reply to this email with any feedback or let me know which macro trends or markets you’d like me to cover next.

Best Regards,
—Noah Zelvis
Macro Notes