American consumers could be about to experience the consequences of the tariff actions by US President Donald Trump.
CNBC reported that CEO Andy Jassy said Amazon is still waiting to see how Trump’s tariffs “play out,” but that its network third-party sellers may “pass that cost on” to consumers.
Silicon UK had last week identified that Trump’s so called “Liberation Day” sweeping “reciprocal” tariffs could potentially trigger higher prices on Amazon for Americans, as well as potentially pushing up the prices of smartphones and other electronic devices manufactured in China.
Trump’s tariffs
The trade war between the United States and the People’s Republic of China (PRC) continued late this week, after Trump raised tariffs on Chinese imports to the US to 125 percent, and then on Thursday opted to push the tariff up to 145 percent.
Beijing then hit back and raised its tariffs on US goods from 84 percent to 125 percent.
“I understand why, I mean, depending on which country you’re in, you don’t have 50 percent extra margin that you can play with,” Jassy said in an interview with CNBC’s Andrew Ross Sorkin. “I think they’ll try and pass the cost on.”
It should be remembered that Amazon’s huge third-party marketplace is made up of millions of sellers, many of which are based in China or source their products from that country.
Third-party sellers now account for about 60 percent of all products sold on Amazon’s website, CNBC reported.
Jassy reportedly said the company has done some “strategic forward inventory buys” and looked to renegotiate terms on some purchase orders in an effort to keep prices low.
Amazon also began to cancel some direct import orders for products sourced by vendors in China this week following Trump’s tariffs announcement, consultants told CNBC.
Some vendors of home goods and kitchen accessory items had products ready for pickup by Amazon at shipping ports, only to receive a notification via an internal system, called Vendor Central, that their orders were cancelled.
Amazon has seen some evidence of consumers stocking up on items in anticipation of price hikes, but it’s too early to tell how widespread that behaviour is, Jassy reportedly said.
“People have not stopped buying and in certain categories, we do see people buying ahead, but it’s hard to know if it’s just an anomaly in the data because it’s just a few days, or how long it’s going to last,” Jassy told CNBC.
Jassy added that Amazon Web Services started the process of diversifying its supply chain roughly five years ago, allowing it to source components from a number of markets, “not just one country.”
The company has no plans to slow down the buildout of new data centres, he added.
Anker prices
Meanwhile Reuters reported that China’s Anker, one of Amazon’s largest sellers offering products from power banks to phone cases, has raised prices on a fifth of its products on the US platform since Thursday, in a clear sign that US tariffs on Chinese goods are being passed on to American consumers.
Some 127 Anker products have seen an average increase of 18 percent since Thursday last week, with the majority of those occurring after Monday, 7 April, when Trump added an extra 50 percent import duty on Chinese goods, according to data from e-commerce services provider SmartScout.
Reuters reported that the move follows warnings from China’s largest cross-border e-commerce association that many Chinese companies that sell products on Amazon are preparing to hike prices for the US or quit the market due to the US tariffs.
