Amazon is preparing for the wide effects of President Donald Trump’s new pricing regime, with Andy Jassy, the CEO, warning that third -party sellers of the electronic commerce giant are likely to transfer the cost burden to consumers.
This, he noted, could have wavy effects throughout the American economy, especially in the categories already vulnerable to the volatility of the supply chain.
“I understand why – depending on the country in which you are, you do not have 50% additional margin with which you can play,” said Jassy in an interview with Andrew Ross Sorkin of CNBC on Thursday. “I think they will try to transmit the cost.”
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The concern that companies will adopt the costs of the line is that which has been taken up by Trump’s tariff policy. While the president initially announced reciprocal prices specific to the country, he then revised the plan, imposing a flat rate at 10% on all American trade partners, with the exception of China, where the prices were highly hiked at 125%. Although the modification may appear as a retirement, it does not do much to minimize the impact. A significant part of consumer goods bought in the United States – from electronics and clothing to household items – still come from China. The burden of these high costs will probably be felt at daily prices.
Jassy’s comments come to the heels of his annual shareholder letter, where he described Amazon’s efforts to absorb the shocks of the new trade policy. The company has taken pre -empty measures such as “purchases of strategic transfer stocks” and renegotiation of purchase orders to manage the increase in supply costs. However, these strategies only offer temporary help.
Already, the signs of tension emerge. Amazon began to cancel direct import orders for certain products from China, according to supply chain consultants who spoke to CNBC. Some sellers, in particular in the categories of goods and kitchen utensils, have prepared their shipments in the Chinese ports, to be informed via the central system of the internal supplier of Amazon that their orders had been canceled without warning.
Cancellations mark a central change in the way Amazon manages the inventory of its vast third party ecosystem, many of which greatly depend on Chinese manufacturing. The company, often considered a bell tower for wider retail trends, now sails an increasing uncertainty while its sellers have trouble adapting to the new cost environment.
There are already signs of changes in consumer behavior. Jassy noted that Amazon saw “certain evidence” of customers filling up with products in anticipation of price increases, although he warned that it was still too early to determine whether this trend lasts or simply a short -term response.
“People have not stopped buying and in certain categories, we see people buying in advance,” he said. “But it is difficult to know if it is only an anomaly in the data because it is only a few days, or how long it will last.”
Beyond the retail division, the implications of the prices extend to the most lucrative commercial unit of Amazon: Cloud Computing. Amazon Web Services (AWS), which plays a central role in the current arms race for artificial intelligence, could face increased costs in the construction of infrastructure – in particular data centers – underlying the workloads of the AI. Material components, semiconductors, cooling systems and server equipment, a large part of which come from Asia, are now taken in an uncertain price network.
However, Jassy projected optimism on this front, highlighting the first movements of Amazon to diversify his supply chain.
“We started this process about five years ago,” he said, noting that WS has widened its supplier base beyond a single country. “We will continue to build.”
Amazon is committed to investing up to $ 100 billion this year only in AI infrastructure and technologies. This level of expenditure highlights the long -term bet of the company on AI, even in an increase in commercial costs and geopolitical opposite winds.
Nevertheless, the broader economic impact of Trump’s pricing thrusts remains a concern. While the White House defended politics as a necessary movement to level the rules of the game and protect American manufacturing, economists and commercial experts warn that American consumers are likely to feel the effects more directly than foreign producers. The National Federation of Retail, for example, has long argued that prices work as a hidden tax on consumers, injuring disproportionately low and intermediate income families who spend a larger share of their goods in goods.
And although the price of 10% coverage offers a certain predictability, the exception has widened for China – with a strong 125% sample – means that many goods on which Americans will always have a significant increase in costs.
This reality is starting to settle among retailers and manufacturers, who are now struggling with higher supply costs and logistical obstacles.
For Amazon, the challenge is to remain competitive on prices while sailing in a radically modified commercial landscape. Jassy’s comments suggest that the company is committed to protecting consumers from the largest impact as far as possible, but ultimately, arithmetic can be difficult to avoid.
