Are Amazon's Prices Going Up? Here's How the Company's CEO Answered Questions About Tariffs. Raise prices or absorb costs? Amazon CEO Andy Jassy says sellers are figuring out how to respond to tariffs.
By Sherin Shibu Edited by Melissa Malamut
Key Takeaways
- President Donald Trump levied a tariff of at least 145% on China earlier this week.
- Amazon CEO Andy Jassy said that sellers on the platform would likely react to tariffs by hiking up consumer prices.
- Up to 70% of products on Amazon come from China.
Amazon CEO Andy Jassy said on Thursday that Amazon sellers would probably respond to President Donald Trump's tariffs by raising prices for consumers.
"I think they [sellers] will try and pass the cost on," Jassy told CNBC in an interview.
Trump levied a 10% tariff on all trading partners and an "at least" 145% tariff on China earlier this week that could impact consumer prices. The tariff news has thrown Amazon sellers into a panic because the majority of goods on the platform, up to 70% of products per Wedbush Securities estimates, come from China.
While sellers decide whether to raise prices or absorb tariff costs, some Amazon shoppers could be responding to tariffs by stocking up before any price hikes — though Jassy says the short-term nature of shopper data makes it hard to tell if it's a long-term trend.
"People have not stopped buying, and in certain categories, we do see people buying ahead, but it's hard to know if it's just an anomaly in the data because it's just a few days, or how long it's going to last," Jassy told CNBC.
Amazon CEO Andy Jassy. Photographer: Michael Nagle/Bloomberg via Getty Images
Amazon's marketplace consists of roughly 9.7 million sellers that contribute to 60% of sales on the platform. According to Fox Business, more than half of the top sellers on Amazon are based in China.
Jassy told CNBC that Amazon has made some "strategic" inventory buys and is trying to renegotiate terms for some purchase orders in response to tariffs. According to Bloomberg, Amazon canceled orders for beach chairs, scooters, air conditioners, and other products from numerous Amazon sellers in China last week after Trump announced his tariff plan on April 2.
Amazon Is Still Spending on AI
Jassy also released his annual shareholder letter on Thursday, outlining the reasons why Amazon is set to spend $100 billion this year on AI.
According to the letter, Jassy said that AI currently requires a "substantial capital investment," but will one day "not be as expensive as it is today" as the cost of AI chips goes down.
