Amazon CEO Andy Jassy said President Donald Trump’s sweeping tariffs are starting to be reflected in the price of some items, as sellers weigh how to absorb the shock of the added costs.
Amazon and many of its third-party merchants pre-purchased inventory to try to get ahead of the tariffs and keep prices low for customers, but most of that supply ran out last fall, Jassy said in a Tuesday interview with CNBC’s Becky Quick at the World Economic Forum in Davos, Switzerland.
“So you start to see some of the tariffs creep into some of the prices, some of the items, and you see some sellers are deciding that they’re passing on those higher costs to consumers in the form of higher prices, some are deciding that they’ll absorb it to drive demand and some are doing something in between,” Jassy said. “I think you’re starting to see more of that impact.”
The comments are a notable shift from last year, when Jassy said Amazon hadn’t seen “prices appreciably go up” a few months after Trump announced wide-ranging tariffs.
Last April, Jassy also predicted that some sellers may be forced to pass the added cost of the tariffs on to consumers because some businesses “don’t have 50% extra margin that you can play with.”
Amazon sellers previously told CNBC they were considering or had already raised the price of some items due to higher import costs in the wake of the tariffs.
A major retail trade association warned last August that the trade war would loom over companies’ inventory ordering plans this Spring, which could lead to higher prices, fewer products on the shelves and job losses.
Amazon is trying to “keep prices as low as possible” for consumers, but in some cases, price hikes may be unavoidable, Jassy said Tuesday.
“At a certain point, because retail is, as you know, a mid-single digit operating margin business, if people’s costs go up by 10%, there aren’t a lot of places to absorb it,” Jassy said.
“You don’t have endless options,” he added.
Consumers remain “pretty resilient” and are still spending amid the tariffs, Jassy said. But they have impacted some shoppers’ purchasing habits, with Amazon observing some people trading down to lower priced items and bargain hunting, while others are holding off from buying higher-priced discretionary products, he said.
