Amazon pressures suppliers to cut prices to limit Trump tariff shock

April 28, 2025

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Amazon is seeking steep discounts from suppliers and setting tough terms to protect its margins, as the technology giant works to limit the damage from US President Donald Trump’s tariffs.

The Seattle-based group had sought low double-digit price cuts from the sellers of goods ranging from homeware to consumer electronics, according to three vendor consultants — who negotiate on behalf of multiple brands and suppliers.

The world’s largest ecommerce platform has been more aggressive with suppliers sourcing from China after the White House imposed tariffs of up to 145 per cent, the people added — although other vendors have also been squeezed.

“Amazon is the 800-pound gorilla in the room,” said Scott Miller, a consultant and former Amazon vendor manager. “Brands have grown dependent on the platform and have little choice.”

The $2tn company is relying on a familiar playbook from Trump’s first term in office when the US president also imposed tariffs on Chinese imports.

Amazon has followed rivals including Costco and Walmart in leaning on suppliers to reduce the hit to its profits this year. Goldman Sachs analysts said the levies could knock $5bn-$10bn off Amazon’s operating profits this year, depending on how the trade war plays out, a hit of 6-12 per cent.

Amazon said: “We’re working with our broad, varied range of valued selling partners in our store to support them in adapting to the developing environment while maintaining low prices for customers.”

Several logistics providers and analysts told the Financial Times that Amazon had brought forward shipments after Trump entered office in anticipation of raised tariffs.

Amazon also cancelled a large number of direct imports from China and had pivoted to purchasing goods from suppliers with US stock, according to two consultants.

Andy Jassy, Amazon’s chief executive, told CNBC in an interview earlier this month that sellers on its online marketplace were likely to raise prices but the company was locked in negotiations with its own suppliers to keep prices down.

“There are some cases where we have deals we negotiated that weren’t done where we’ll renegotiate terms to make it easier for customers to have lower prices,” Jassy said.

Amazon, whose shares have fallen 14.8 per cent this year, will release first-quarter earnings on Thursday and provide financial forecasts for the next three months.

The first tariffed shipments from China landed in US ports on Monday with inventory for the summer season, with analysts expecting price increases to emerge for consumers around the middle of this year if the measures persist.

Amazon had taken a less aggressive stance elsewhere, offering to swallow as much as a third of tariffs on non-China imports, which were at 10 per cent during a 90-day pause period, several consultants said.

“To their credit, they have been willing to absorb some of the increased costs,” Miller said.

Consultants said Amazon had informed clients that it would accept cost increases on non-Chinese imports, but only where the manufacturer agreed to a fixed margin for the ecommerce group. That means suppliers would take the hit if an item’s sale price on Amazon falls.

Eric Sheridan, an analyst at Goldman Sachs, said he was also paying close attention to Amazon’s third quarter when it traditionally runs a 48-hour “Prime Day” sales event for members of its subscription service.

Prime Day takes place twice a year in July and October. The summer edition generated $14.2bn last year, according to Adobe Analytics. But this year’s event is expected to feature less steep discounts.

“There will be some costs that have to be borne [due to tariffs] . . . a degree of which is passed along to the consumer,” Sheridan said.

 

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