Amazon‘s recent outreach to its third-party sellers highlights the growing concern over the financial strain caused by tariffs on goods imported from China. The company’s initial success drove it deeper into Chinese product reliance for its marketplace. Today, it has just begun to convene U.S. merchants to learn how such levies are affecting their business and pricing policies.
Amazon’s seller relations team reached out with this email outlining a number of key questions. Here’s what they were most anxious to talk about—the current U.S. tariff situation. Most importantly, they wanted to know how it has changed sellers’ sourcing practices. They asked how it affected logistics operations and planning their shipments of goods into Amazon warehouses. This outreach comes as Amazon grapples with the ramifications of tariffs that President Donald Trump signed into law, which initially imposed steep duties on various imports but later settled on a universal 10% rate for all trade partners save for China, which faces an imposing 125% tariff.
These tariffs are having a pretty damaging impact on Amazon’s third-party marketplace. This marketplace accounts for nearly 60% of all goods sold on the platform. With each increase in tariffs, operational expenses skyrocket for importers. To offset these costs, many vendors will be forced to pass on their price increases to customers.
To their credit, Amazon seems to be doing something about it. They’ve suspended targeted direct import orders for Chinese supplier products. This decision is an example of a smart move in anticipation of risks posed by inflated costs and broken supply chains.
Even Amazon CEO Andy Jassy admitted that sellers have had a tough go of it at a recent Congressional hearing.
“I understand why, I mean, depending on which country you’re in, you don’t have 50% extra margin that you can play with,” – Andy Jassy
Jassy publicly expressed his concerns on the heavy financial load tariffs have placed on many third-party sellers. He worries that would force many businesses to leave, exacerbating the damage done in Amazon’s marketplace. The possible fallout from these tariffs has already started to create waves through other areas of Amazon’s retail business.
With shares of Amazon down an astounding 18% so far this year, the company is feeling the heat to chart a steady course through these rough waters. The impact of tariffs on both sellers and consumers will likely continue to unfold as discussions progress and new strategies are implemented.