May 7, 2025
Photo by appshunter.io on Unsplash
How Will Amazon Weather the Tariffs?
On Amazon’s first-quarter analyst call, CEO Andy Jassy highlighted the company’s broad selection of products, competitive pricing, and fast delivery as key factors that would help Amazon navigate uncertain economic conditions that may result from the trade war, just as it did during the COVID-19 pandemic.
“Given our really broad selection, low pricing, and speedy delivery, we have emerged from these uncertain areas with more relative market segment share than we started and better set up for the future,” Jassy said. “I’m optimistic this could happen again.”
Customers “choose the provider they trust most” in uncertain times, and “unexpected” trends develop during such periods that Amazon can capitalize on, according to Jassy.
“Think about the pandemic when items like masks and hand sanitizer became big sellers,” said Jassy. “When you have the broadest selection like we do and 2 million plus global sellers like we do, you’re better positioned to help customers find whatever items matter to them at lower price points than elsewhere.”
Regarding items sourced from China, the CEO expects Amazon to benefit from the many sellers on its platform who source directly from China and avoid intermediary costs.
He elaborated, “Retailers who aren’t buying directly from China are typically buying from companies who themselves are buying from China, marking these items up, rebranding, and selling to U.S. consumers. These retailers are buying the product at a higher price than Chinese sellers selling directly to U.S. consumers in our marketplace, so the total tariff will be higher for these retailers than for China direct sellers.”
A 2024 Jungle Scout survey found that 71% of Amazon sellers have at least one product made in China.
Jassy added that while some third-party sellers will raise prices to offset tariff costs, others may absorb the costs to gain market share, helping Amazon maintain variety and competitive prices. Jassy said, “When you’ve got larger diversity like we have, we have a better chance of some of those sellers deciding that they’re going to capture share, and they’re not going to pass on all or any of those tariffs to the customers.”
Finally, Jassy noted that while Amazon sells many discretionary items, a third of its mix in the first quarter was “everyday essentials,” or items less likely to see a pullback in spending should the economy weaken. He added, “Even if you exclude Whole Foods Market and Amazon Fresh, Amazon is one of the largest grocers in the U.S. with over $100 billion in gross sales last year. People are buying a lot of their everyday essentials at Amazon.”
Regardless, Amazon officials provided a wide range for second-quarter guidance due to the tariff uncertainty and their impact on consumer spending.
“It’s hard to tell where they’re going to settle and when they’re going to settle,” said Jassy of the tariffs. “And so a lot of what we’re thinking about, short and medium term, actually turns out to be what we think about long term too, which is how do we actually have the broadest possible selection for customers at the lowest possible prices?”
BrainTrust
Jamie Tenser
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
Christopher P. Ramey
President, Affluent Insights & The Home Trust International
Lisa Goller
B2B Content Strategist
Recent Discussions
Discussion Questions
Is Amazon’s retail business more exposed or insulated from any fallout from the trade war?
Do you think Amazon is better or worse positioned than its primary U.S. broadline competitors (Walmart, Target, Costco) when it comes to handling the tariff disputes?
Poll
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Amazon is comparatively more insulated from the trade war due to its massive assortment for variety, global sourcing for resiliency and disciplined processes for efficiency. Affordability and deep loyalty keep Amazon top-of-mind. B2B services like retail media and logistics keep revenue flowing even if consumption slows.
No retailer is a winner from tariffs; all will experience issues. However, some – like Amazon – are in a better position than others. On the retail side, Amazon will gain from the current issues with Shein and Temu. It also has a more defensible proposition because of its extensive range of price points, which allows consumers to trade up and down as they need. On top of all of that, Amazon has a lot of additional revenue streams that support its top and bottom lines.
Most of my “Amazonian” 3P Marketplace reseller accounts in the office supply and toy/game categories have tanked this quarter. Even though *my* company’s products are 100% made-in-USA, most of what they list is imported. Amazon punishes 3Ps who keep excessive inventory, so these merchants by necessity rely on just-in-time deliveries. They are getting hammered by both tariffs as well as the collapse of transpacific shipping – and they are the literal canaries in the coal mine.
Amazon knows how to navigate shaky economic times. Furthermore, Amazon is so confident in its customer experience that it’s willing to post information on competitors who may have lower prices. There are many reasons customers enjoy doing business with Amazon. For the most part, the prices are low or very competitive. But most important is the confidence the customer enjoys when doing business with Amazon. (Our annual CX research finds that just over half of US customers are willing to pay more when they know the service will be great.)
Love the findings on paying more for good service. Because at the end of the day, customers know there is a value in saving themselves time and hassles, so they can get on with their life, on toward other things and experiences.
Amazon is likely in one of the best positions to prepare and plan for the impact of tariffs while minimizing the sales hit. They’ll find a way to maximize their large, deep offering while keeping cost increases in check needed to stay competitive. Being mostly an online retailer gives them a baked in advantage of flexibility and shifts over WalMart, Target and Costco in this way.
Amazon’s sheer scale should provide some resilience in the face of new import tariffs, compared with much less powerful competitors. But Walmart and Costco each have their own bulwarks due to their sourcing power.
Lisa’s point about the insulating effects of retail media revenues is well-taken here. In the short-term, at least, those extra profits may allow more strategic options when it comes to absorbing (or at least blunting) short term price impacts.
Thank you, James.
Curiously, the – to me, anway – obvious choice (“they’re about equally well placed”) is omitted. Of course no two companies are ever equal in everything, and by virtue of size Amazon probably has some advantages, whether it’s in actual selling or political influence. (Tho in the last attribuate, they are also potentially the biggest target as well…as we saw last week.)
Amazon will emerge the winner in the tiffs over tariffs because their customers trust them on price.
Amazon’s retail business could face higher costs and prices due to tariffs on imported goods from the trade war. However, its global network of suppliers and logistics capabilities help reduce these impacts.
Amazon’s strong e-commerce platform, advanced technology, and data analytics allow it to adapt quickly to market changes. Its efficient inventory management and extensive fulfillment centers optimize its supply chain.
Additionally, Amazon’s global marketplace offers more product options and flexibility in sourcing compared to competitors.
Amazon will weather this storm fine. Their assortments and vendor structure is so diverse that, like a giant amoeba, they’ll flow in and around the shifting tariff and international supply chain issues and be fine. Their size and their deep network of third-party sellers are a big advantage for them in this environment. I also think their value prop will buoy them as consumers look for ways to make cuts to the family budget while trying to maintain their lifestyle choices.
Pricing is going to affect everyone, and as long Amazon can stay current and fluid in their pricing strategy, that will be a low-risk variable. This is one area where not having physical stores works in their favor.
What is a bigger risk, IMHO, is their exposure to issues with international shipping and issues with transportation costs. As freight traffic declines, there is a strong risk that shippers will increase fees to offset their fixed costs, especially if they have to move freight through modes that are at less than full capacity. Given the size of Amazon’s shipping, both their own and their independent sellers, they could see margin issues that are harder to explain to their customers than simple tariffs. (Well, what should be simple but apparently nothing is easy now)
Let’s start by recognizing just how deeply embedded Amazon has become as the default/go-to “retailer” of choice for an enormous range of products. Most customers are keenly aware of the whole tariff scenario at this point and won’t blame Amazon any more, or less, than other retailers for pricing confusion or out of stock issues. That doesn’t take Amazon off the hook for how they communicate pricing and execution issues. They have multiple opportunities to communicate with the customer as they log on, shop and check out. If they aren’t going to be explicit about tariff charges, then how exactly are they going to handle it? And if they aren’t explicit, and other brands and retailers are explicit, who will the customer reward with market share?
As the execution of tariff pricing unfolds, Amazon is in a better position than most, simply out of their embedded status. The level of customer trust that they currently enjoy is theirs to lose if they don’t choose wisely in their tariff pricing rollout.
Tariffs are likely to lead to a decrease in demand for products as prices rise. This creates a substitution effect, where consumers may turn to alternative options. Unless consumers are willing to incur more debt during these uncertain times, many smaller local retailers may have to close their stores and cease operations. In contrast, larger companies like Amazon have the financial resources to endure the current trade wars until the situation stabilizes and a new trade landscape emerges. This stability is crucial for them to make informed investment and manufacturing decisions and to establish long-term sourcing relationships. While large retailers such as Amazon, Walmart, and Target are expected to weather the storm, the genuine concern lies in the potential impact on small independent retailers within local communities. Small independent retailers in local communities.
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Amazon is comparatively more insulated from the trade war due to its massive assortment for variety, global sourcing for resiliency and disciplined processes for efficiency. Affordability and deep loyalty keep Amazon top-of-mind. B2B services like retail media and logistics keep revenue flowing even if consumption slows.
No retailer is a winner from tariffs; all will experience issues. However, some – like Amazon – are in a better position than others. On the retail side, Amazon will gain from the current issues with Shein and Temu. It also has a more defensible proposition because of its extensive range of price points, which allows consumers to trade up and down as they need. On top of all of that, Amazon has a lot of additional revenue streams that support its top and bottom lines.
Most of my “Amazonian” 3P Marketplace reseller accounts in the office supply and toy/game categories have tanked this quarter. Even though *my* company’s products are 100% made-in-USA, most of what they list is imported. Amazon punishes 3Ps who keep excessive inventory, so these merchants by necessity rely on just-in-time deliveries. They are getting hammered by both tariffs as well as the collapse of transpacific shipping – and they are the literal canaries in the coal mine.
Amazon knows how to navigate shaky economic times. Furthermore, Amazon is so confident in its customer experience that it’s willing to post information on competitors who may have lower prices. There are many reasons customers enjoy doing business with Amazon. For the most part, the prices are low or very competitive. But most important is the confidence the customer enjoys when doing business with Amazon. (Our annual CX research finds that just over half of US customers are willing to pay more when they know the service will be great.)
Love the findings on paying more for good service. Because at the end of the day, customers know there is a value in saving themselves time and hassles, so they can get on with their life, on toward other things and experiences.
Amazon is likely in one of the best positions to prepare and plan for the impact of tariffs while minimizing the sales hit. They’ll find a way to maximize their large, deep offering while keeping cost increases in check needed to stay competitive. Being mostly an online retailer gives them a baked in advantage of flexibility and shifts over WalMart, Target and Costco in this way.
Amazon’s sheer scale should provide some resilience in the face of new import tariffs, compared with much less powerful competitors. But Walmart and Costco each have their own bulwarks due to their sourcing power.
Lisa’s point about the insulating effects of retail media revenues is well-taken here. In the short-term, at least, those extra profits may allow more strategic options when it comes to absorbing (or at least blunting) short term price impacts.
Thank you, James.
Curiously, the – to me, anway – obvious choice (“they’re about equally well placed”) is omitted. Of course no two companies are ever equal in everything, and by virtue of size Amazon probably has some advantages, whether it’s in actual selling or political influence. (Tho in the last attribuate, they are also potentially the biggest target as well…as we saw last week.)
Amazon will emerge the winner in the tiffs over tariffs because their customers trust them on price.
Amazon’s retail business could face higher costs and prices due to tariffs on imported goods from the trade war. However, its global network of suppliers and logistics capabilities help reduce these impacts.
Amazon’s strong e-commerce platform, advanced technology, and data analytics allow it to adapt quickly to market changes. Its efficient inventory management and extensive fulfillment centers optimize its supply chain.
Additionally, Amazon’s global marketplace offers more product options and flexibility in sourcing compared to competitors.
Amazon will weather this storm fine. Their assortments and vendor structure is so diverse that, like a giant amoeba, they’ll flow in and around the shifting tariff and international supply chain issues and be fine. Their size and their deep network of third-party sellers are a big advantage for them in this environment. I also think their value prop will buoy them as consumers look for ways to make cuts to the family budget while trying to maintain their lifestyle choices.
Pricing is going to affect everyone, and as long Amazon can stay current and fluid in their pricing strategy, that will be a low-risk variable. This is one area where not having physical stores works in their favor.
What is a bigger risk, IMHO, is their exposure to issues with international shipping and issues with transportation costs. As freight traffic declines, there is a strong risk that shippers will increase fees to offset their fixed costs, especially if they have to move freight through modes that are at less than full capacity. Given the size of Amazon’s shipping, both their own and their independent sellers, they could see margin issues that are harder to explain to their customers than simple tariffs. (Well, what should be simple but apparently nothing is easy now)
Let’s start by recognizing just how deeply embedded Amazon has become as the default/go-to “retailer” of choice for an enormous range of products. Most customers are keenly aware of the whole tariff scenario at this point and won’t blame Amazon any more, or less, than other retailers for pricing confusion or out of stock issues. That doesn’t take Amazon off the hook for how they communicate pricing and execution issues. They have multiple opportunities to communicate with the customer as they log on, shop and check out. If they aren’t going to be explicit about tariff charges, then how exactly are they going to handle it? And if they aren’t explicit, and other brands and retailers are explicit, who will the customer reward with market share?
As the execution of tariff pricing unfolds, Amazon is in a better position than most, simply out of their embedded status. The level of customer trust that they currently enjoy is theirs to lose if they don’t choose wisely in their tariff pricing rollout.
Tariffs are likely to lead to a decrease in demand for products as prices rise. This creates a substitution effect, where consumers may turn to alternative options. Unless consumers are willing to incur more debt during these uncertain times, many smaller local retailers may have to close their stores and cease operations. In contrast, larger companies like Amazon have the financial resources to endure the current trade wars until the situation stabilizes and a new trade landscape emerges. This stability is crucial for them to make informed investment and manufacturing decisions and to establish long-term sourcing relationships. While large retailers such as Amazon, Walmart, and Target are expected to weather the storm, the genuine concern lies in the potential impact on small independent retailers within local communities. Small independent retailers in local communities.