Amazon faces mounting pressure as tariffs loom over sellers
Amazon is attempting to alleviate sellers' concerns regarding the impact of tariffs imposed by Donald Trump's administration on e-commerce activities. The company assures that it has not yet observed a drop in demand or a significant increase in retail prices, but analysts warn that it is only a matter of time.
The new American tariffs on imports from China, reaching as high as 145 per cent, are forcing major corporations – including Amazon, Walmart, and Apple – to urgently reorganise supply chains and seek savings. Amazon, a giant in the e-commerce sector in the USA, reassures that for now, demand appears stable.
Amazon reassures, but the effects of tariffs may affect sellers
However, the company admits to having observed increased purchases in certain categories. This is likely due to the actions of external sellers attempting to build up inventory before the full implementation of the tariffs. However, as analysts warn, temporary measures like purchasing inventory will only delay sellers' problems in the short term.
Gil Luria from the U.S.-based financial services firm D.A. Davidson believes the inventory likely won’t last beyond six months. If the current uncertainty continues past that point, he anticipates that Amazon may be forced to take more drastic measures—such as raising product prices and accepting structurally lower profit margins for sellers.
Apple has stated that tariffs could raise its costs by close to one billion dollars in the current quarter. In response, CEO Tim Cook has announced a restructuring of the company’s supply chain. He estimated that, if current tariff rates remain unchanged and no new ones are introduced by the end of the quarter, the additional cost would amount to approximately 900 million dollars. Cook shared this during Thursday’s quarterly earnings call.
An additional challenge for Amazon arises today - the "de minimis" rule expires on 2nd May. This was a customs exemption for cheap shipments from China, which external sellers eagerly utilised. CNN reports that nearly 4 million such shipments are currently being processed in the USA. The end of these benefits may mean that many Americans will only now feel the real effects of tariffs on Chinese imports.
