This past week, President Donald Trump announced his full plan for tariffs on imports -- a list of duties varying by country that could make a wide range of goods pricier for U.S. companies and consumers. Stocks sank in the session following the news, and the S&P 500 and Nasdaq even posted their worst performances since 2020.

The concern for investors is that these higher prices will weigh on corporate earnings in two ways. First, higher prices will hurt consumers' buying power, leaving them with less to spend on discretionary items. Second, they will increase costs for companies that import anything from raw materials to finished goods. Worries about the overall economic backdrop are growing too, with some economists saying a recession could be in the cards.

All this may sound like a recipe for disaster, particularly for companies that sell consumer goods. But before drawing such conclusions, let's take a closer look at the current situation and find out what it really means for these companies -- and for investors.

Image source: Getty Images.

A broadened tariff plan

We'll start with a bit of background on the tariffs. Trump initially announced tariffs to be applied to Mexico, Canada, and China, but later broadened the plan to include all countries that impose import tariffs on the U.S. Trump's tariffs, going into effect early this month, vary according to country or group of countries. For example, China faces a tariff of 54% on its goods imported into the U.S., while the European Union faces a 20% duty.

The plan has also set a 10% baseline tariff on all imports. However, a free trade agreement between the U.S., Mexico, and Canada remains untouched, allowing agricultural products, textiles, and certain other items to circulate tax-free.

The continuation of the free trade agreement is positive, and so are two other elements. Though the president's aides have said bargaining wasn't on the agenda, Trump himself has suggested that he would consider negotiations. So it's possible that the tariff story is far from over with this latest move. The other silver lining in the cloud is that companies knew of Trump's intentions and likely have been considering options. They aren't completely unprepared, and strong players have the resources to manage.

Costco's "well equipped" to deal with tariffs

I'll use Costco (COST -5.11%) as an example. When asked about the tariffs during the latest earnings call, CEO Ron Vachris said that "our people are very well equipped to deal with anything coming our way." The warehouse giant already offers value to customers, by ordering in bulk and keeping prices extremely low, so it has some wiggle room to absorb or lift prices. The company said it also has the ability to replace certain items with others that may represent lower costs for Costco and the consumer.

Costco has proven its strength in the area of lowering prices through local sourcing. For example, in China it introduced Kirkland Signature -- its in-house brand -- purified water that's produced locally. By doing this, Costco achieved savings of more than 20% for customers.

In other instances, the free trade agreement concerning North America may soften the effect of tariffs. For example, last month, Target (TGT 1.47%) CEO Brian Cornell spoke of how tariffs on products like avocados and bananas from Mexico could force the company to raise prices. But under the latest plan, agricultural products won't be taxed.

Target also has more than 45 private labels -- and more than 10 of them generate $1 billion in revenue annually. Since Target owns these brands, it has more flexibility regarding costs, giving it room to compensate for new expenses such as tariffs.

A tailwind for Amazon

Finally, one more example: Amazon (AMZN -3.92%). Though the company will surely face headwinds from the tariffs -- like most retailers -- it could also benefit from one tailwind. Competitors from China, such as fast fashion retailer Shein, will no longer be as cheap as they used to be for U.S. buyers. Trump eliminated a tariff exemption on goods from China valued less than $800, and this will go into effect in early May.

So, what does all this mean for you as a consumer goods investor? Trump's tariffs clearly present a challenge for consumer goods companies, but the sector's strongest players have the resources to manage during these tough times. It's important to remember that they've all been through other difficult moments, navigating rising inflation and supply chain disruptions a few years ago, to note just one example.

Yes, this could weigh on earnings in the near term. But over the long term, their prospects haven't changed. People still need to buy items sold by this wide range of companies, and as history has shown us, difficult economic periods don't last forever. All this means that the best thing consumer goods investors could do right now is hold on to quality companies, add to your positions when you find a bargain -- and there are many around these days -- and maintain a long-term view. A few years down the road, quality consumer goods players are very likely to generate growth, and you'll thank yourself for staying the course.