If there’s one company that’s built a moat wider than the Grand Canyon, it’s Costco. They’ve got a business model so solid that even Warren Buffett probably looks at it and says, “Damn, that’s efficient.”

Costco’s entire strategy boils down to making people pay for the privilege of spending more money. Over 130 million people happily fork over up to $120 a year just for the right to enter a glorified warehouse. In return, they get to buy three years’ worth of toilet paper in one go at a discount. It’s a beautiful scam, and it works. Instead of drowning in 140,000 different products like Walmart, Costco carries only 4,000, meaning suppliers practically grovel to be featured. And marketing? Please. Costco fans do all the advertising for them, yelling about Kirkland Signature products like they’re part of an underground cult.

And let’s not forget the sacred $1.50 hot dog combo, which has remained untouched since the Reagan years. This single menu item has survived recessions, inflation, and at least three different Twitter CEOs. People may switch political parties, but they will die on the hill that Costco’s hot dog must never cost a cent more.

And yet, even Costco is getting hurt badly by Trump’s tariff onslaught… tanking the stock 8%.

Costco’s latest earnings report was a classic case of “good news, bad news.” Revenue came in at $63.7 billion, beating expectations of $63.01 billion. However, earnings per share landed at $4.02, missing Wall Street estimates by nine cents. Same-store sales jumped 6.8%, but Canada and other international markets fell short of expectations. On the bright side, e-commerce growth was an impressive 22.9% (people love bulk shopping from their couch). And to end the pain… membership fees, a key component of Costco’s profit machine, came in at $1.19 billion, slightly below projections.

If you skimmed those numbers, you might be thinking, “Eh, not too shabby.” So why did Costco’s stock get smashed like a folding chair at a WWE event? Aside from missing EPS expectations by a few cents (something that would normally trigger a mild shrug) investors freaked out over the company’s cautious tone on tariffs. And as we all know, in this market environment, when Wall Street panics, even a business with a fanbase more loyal than Swifties isn’t safe.

CEO Ron Vachris and CFO Gary Millerchip didn’t exactly sound the doomsday alarm, but they didn’t need to. The math speaks for itself… about one-third of Costco’s U.S. sales come from imported goods, and nearly half of those come from China, Mexico, and Canada. If Trump’s tariff plans move forward, those beloved bulk discounts could start disappearing faster than my golf balls on a water hole.

Millerchip tried to keep things light, saying, “We’re well-equipped to handle this.” But in the same breath, he also admitted that Costco is aggressively stocking up on inventory. It’s a strategic move (loading up now means they can cushion the blow if tariffs hit) but it also signals that Costco knows it might have to absorb some of these costs to keep customers happy. Because let’s keep it a hundred, no one is paying $2 for the hot dog combo.

Even after getting knocked down, Costco’s stock is still up 206% over the past five years, averaging a 41% annual return. But that said, the stock is trading at 53 times forward earnings. Higher than a kite. At that price, Wall Street expects nothing short of perfection… flawless execution, uninterrupted growth, and perhaps a signed letter of guarantee from the CEO himself. So it makes even more sense why investors sold the stock off so hard.

Opinions are divided. Bank of America’s Robert Ohmes is still waving the bullish flag, arguing that Costco’s value-driven model will thrive in an era where people are pinching pennies. Others, however, aren’t so sure. Paying a massive premium for a stock with a trade war cloud above its head feels a bit like dropping $100 on a mystery box… maybe it’s a PlayStation, maybe it’s a bunch of off-brand phone chargers.

Costco remains one of the strongest retailers on the planet, but if these tariffs don’t go away soon… look out below.

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Stock.News does not have positions in companies mentioned.