Why Shopify Stock Is Up Today

The so-called "de minimis" tariff, a tax on low-value imports, has been cut as part of the United States' ongoing talks with China.

That's a relief to online small businesses and the companies that serve them. Shares of Shopify (NASDAQ: SHOP) traded up 4% as of 1 p.m. ET on hopes that trade policies are shifting back toward its favor.

Image source: Getty Images.

Scaling back the toll

Shopify provides a platform for e-commerce businesses of all sizes, but small businesses drive a lot of its volumes. Historically, goods valued at $800 or less have been exempted from tariffs, but the White House did away with that exemption as part of its "Liberation Day" tariff announcements.

Though Shopify wouldn't be directly impacted by the move, a lot of its customers could be.

On Tuesday, President Donald Trump issued an executive order slashing the tariff on "de minimis" goods from China to 54%, from 120%. The exemptions are in place for 90 days while talks continue between the two countries on a comprehensive trade deal.

Is Shopify a buy?

While 54% is much better than 120%, the tariff is still a likely burden on a lot of Shopify customers. It is unclear whether the administration has any desire to restore the exemption, meaning costs could be higher for these customers for the foreseeable future.

The good news is that Shopify has the wherewithal to navigate through whatever turbulence these trade wars might cause. The bad news is it could have a near-term impact on earnings should the tariffs persist.

For long-term-focused investors, the tariffs are no reason to avoid Shopify.

Should you invest $1,000 in Shopify right now?

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Lou Whiteman has positions in Shopify. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy.