With the U.S. set to impose a 50% tariff on a wide range of Canadian goods, retailers that rely heavily on U.S.-sourced inventory suddenly sit in a very different light. Higher import costs can squeeze margins, but they can also create openings for competitors that are less exposed to cross border trade. This article looks at three stocks from our Retailers with Predominantly U.S.-Sourced Inventory screener that appear more directly exposed to this tariff news, and explains how the changing cost backdrop could matter for their sales, pricing power, and overall risk profile.

AutoNation (AN)

Overview: AutoNation is a large U.S. automotive retailer that sells new and used vehicles, runs service and collision centers, and offers finance and insurance products across domestic, import, and premium luxury brands, mainly in Sunbelt metro markets. Its business spans traditional dealerships, AutoNation-branded used car stores, auctions, and a growing in-house finance arm.

Operations: AutoNation generates about US$28.0b in revenue, with around US$10.2b from Premium Luxury, US$8.4b from Import, US$7.5b from Domestic, and US$1.4b from Corporate and Other, all from customers in the United States.

Market Cap: US$6.6b

AutoNation stands out in this tariff story because its inventory is largely sourced in the U.S., so higher costs on Canadian goods could make its offering relatively more attractive versus retailers with heavier import exposure. At the same time, the company leans on high margin after sales and finance income. It also runs on a low P/E and an active buyback program that has steadily reduced the share count. Counterbalancing that, leverage is high, earnings growth is modest, and insiders have been selling shares, which raises questions about risk and governance. For investors watching how tariffs might shift market share and pricing power, that combination of potential upside and balance sheet pressure makes AutoNation worth a closer look.

AutoNation’s mix of U.S.-sourced inventory, high margin after sales income, and a low P/E with active buybacks could be masking a very different risk reward profile. It is therefore worth reading the 3 key rewards and 2 important warning signs (1 is major!)

CarMax (KMX)

Overview: CarMax is the largest dedicated used car retailer in the U.S., buying vehicles directly from consumers and auctions, reconditioning them, and selling them through a mix of physical stores and digital channels, while also offering repairs, protection plans, and in house auto finance.

Operations: CarMax generates about US$28.2b in revenue, with roughly US$26.3b from CarMax Sales Operations and US$1.8b from CarMax Auto Finance, all from customers in the United States.

Market Cap: US$8.2b

CarMax sits at an interesting crossroads for investors: the stock looks expensive on traditional metrics and margins have come under pressure, yet analysts now expect earnings to grow around 24.55% a year and several major brokers have recently raised their price targets after early progress on its turnaround. The company is leaning into omnichannel used car retailing and broader credit spectrum lending. The new U.S. tariffs on Canadian goods matter less because CarMax largely sources vehicles domestically. At the same time, high leverage, a recent one off loss of US$191.1m and thinner profitability keep execution risk high. How that trade off plays out is what makes CarMax worth watching in this tariff focused screener.

CarMax’s turnaround story, with thinner margins but rising optimism around earnings, raises a clear question, and the full picture sits inside the analyst forecasts for CarMax that could reframe how you think about its risk reward balance.

O'Reilly Automotive (ORLY)

Overview: O'Reilly Automotive is a large auto parts retailer that supplies replacement parts, tools, fluids, and accessories for cars and trucks, serving both do it yourself customers and professional repair shops across the United States, Puerto Rico, Mexico, and Canada.

Operations: O'Reilly Automotive generates about US$18.2b in revenue from its automotive aftermarket parts business, with all reported revenue coming from customers in the United States.

Market Cap: US$72.9b

O'Reilly Automotive is drawing attention because it combines strong profitability, a focus on inventory availability, and sourcing that leans heavily on U.S. suppliers, which can be an advantage as tariffs lift costs for Canadian sourced auto parts. Earnings have been solid rather than explosive, and the stock trades on a higher P/E multiple than many Specialty Retail peers. This leaves less room for disappointment if tariffs or a potential NAPA acquisition push costs higher. At the same time, high debt, negative equity, and reliance on external funding mean investors are being paid for taking on more balance sheet risk. This makes the next phase of the O'Reilly story especially important to understand in detail.

O'Reilly Automotive’s strong profitability and U.S. focused sourcing could be masking a sharper risk reward trade off than it first appears, and the real story sits inside the 3 key rewards and 2 important warning signs (1 is major!)

The three stocks in this article are only a starting point, and the full Retailers with Predominantly U.S.-Sourced Inventory screener turns up 24 more companies with equally compelling tariff and sourcing stories waiting to be unpacked through the Retailers with Predominantly U.S.-Sourced Inventory screener. Use Simply Wall St to identify and analyze the exact catalysts, tariff exposure, and balance sheet narratives that matter to you so you can focus on the highest conviction ideas in this theme.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.