Trump tariffs mean higher prices, big losses for Amazon sellers
President Donald Trump’s aggressive tariff policy on April 2 didn’t just cause mayhem in the stock market. It sent Amazon sellers into a panic.
Many sellers on Amazon count on China for manufacturing and assembly due to lower costs and established infrastructure – up to 70% of goods on Amazon come from China, according to Wedbush Securities. With nearly all imports from China being taxed a staggering 145% under the latest tariffs, Amazon sellers are having to decide whether to raise prices or absorb the vastly increased cost of importing their goods.
Amazon CEO Andy Jassy on Thursday told CNBC that its vast network of third-party sellers will likely “pass the cost on” to consumers. He added that Amazon has done some “strategic forward inventory buys” and looked to renegotiate terms on some purchase orders to keep prices low.
Although Trump temporarily lowered tariffs on most countries to 10% on Wednesday, he doubled down on the huge tariffs on goods from China. Before the pause, average tariff rates under Trump were at the highest level since the Great Depression. The “reciprocal tariffs” were far steeper in regions like Southeast Asia. Tariffs also hit U.S. allies at unusual rates, including 20% on the European Union and previously announced 25% tariffs on Mexico and Canada.
Josianne Boisvert of Canadian-based Portable Winch Co. said she “was in a state of shock” when the tariffs were announced. For 20 years, the company has driven its products an hour to the U.S. border for duty-free shipping to American customers.
“We are questioning ourselves if we just move our focus to Europe,” Boisvert said.
CNBC talked to several Amazon sellers to find out how the new tariffs are having an impact on their decisions about prices and where to manufacture.
Price hikes
In a small warehouse in San Rafael, California, Dusty Kenney showed CNBC hundreds of boxes filled with her PrimaStella brand baby spoons, bento boxes and other kids products. Most of them arrived by sea from China before tariffs went into effect. Paying the added tariffs could put her out of business if they continue, she said.
“I will hold my prices for as long as I can and just absorb those tariffs because I’m already competing against those Chinese sellers that are undercutting me,” Kenney said. Although tariffs will also impact her Chinese-based competitors, the cost of doing business in the U.S. is far higher than in China.
“The administration would like people to think that this is a China problem, and that this is only hurting Chinese-based businesses and helping U.S.-based businesses. But I am a U.S.-based business, let’s be clear,” Kenney said. “Everything’s warehoused here, designed here, photographed here. All the income that comes from that stays here.”
Several sellers said they are considering raising prices if Trump’s tariffs stick around.
The vast majority of products on Amazon are sold by third-parties, but tariffs will also impact the company’s first-party brands.
That includes…
Read More: Trump tariffs mean higher prices, big losses for Amazon sellers