With the trade dispute between the United States and China heating up, the "Mad Money" host figured the weakness stemmed from "a belief that the retailers will have to eat the tariffs, meaning they can't pass on all the price increases to consumers."
"Not only that, but Amazon could always undercut any company that makes goods in China and sells them here," he said on Thursday.
The retail stocks' dip came after the United States and China exchanged tariffs on each other's goods earlier this week. On Thursday, the Chinese commerce ministry said it hoped the United States would correct its behavior in the trade dispute.
But given how vocal leaders in the retail space have been about the unfavorable effects of tariffs on their businesses — and Amazon's growing pricing power — Cramer wondered if they would take the brunt of the trade war's negative effects.
"If the tariffs really were going to fall entirely on the heads of consumers, the retail stocks wouldn't have had such a mess today," he said. "Plus, we did just get a tax cut [that] more than makes up for the tariff figure every time I do the numbers."
"Now, this may just be one big rotation out of growth into value, with people selling the expensive stocks and swapping into stocks that sell at a discount to the S&P 500," Cramer continued. "But the bottom line is that's a far more sustainable rally than the other way around. So if we can just tamp down the speculative stocks ... and boost the value plays, then you know what? This move could be built to last."
For more of Cramer's analysis on the retail space, click here.