According to Amazon CEO Andy Jassy, sellers on the platform may choose to raise prices due to increased tariff expenses caused by the recent trade measures implemented by former President Donald Trump. Jassy explained to CNBC that Chinese suppliers, along with other sellers who maintain small profit margins, must increase their prices because they lack alternative options.
Jassy pointed out that sellers lack ample margin cushion to absorb the rising import costs because they need to preserve their profitability. The third-party marketplace at Amazon constitutes approximately 60% of site sales and depends mostly on Chinese vendors and producers for its products.
Amazon has implemented preventive measures such as inventory acquisition in advance and revised purchase agreements to reduce the impact on their operations. The company now terminates direct import orders from Chinese suppliers, which impacts home goods and kitchen accessory categories.
Jassy showed evidence that consumers are starting to purchase items before prices might rise. He warned that it is too premature to verify a clear pattern.
The new 10% universal tariff rate, which excludes China, will affect the infrastructure expenses needed to develop emerging technologies such as artificial intelligence. The leading AI development service provider, Amazon Web Services (AWS), could potentially experience increased expenses. Jassy confirmed that AWS started to expand its supply chain network five years ago to decrease dependence on a single nation.
Jassy declared that Amazon would continue its growth plan, particularly in AI and cloud computing, even though economic conditions remained uncertain. The Amazon executive declared that the company will continue developing new projects while announcing their $100 billion investment plan for AI infrastructure and technology through 2025.
