Amazon is bracing for the wide-reaching effects of President Donald Trump’s sweeping new tariff regime, with CEO Andy Jassy warning that the e-commerce giant’s third-party sellers are likely to shift the cost burden to consumers.
This, he noted, could have ripple effects throughout the U.S. economy, especially in categories already vulnerable to supply chain volatility.
“I understand why—depending on which country you’re in, you don’t have 50% extra margin that you can play with,” Jassy said in an interview with CNBC’s Andrew Ross Sorkin on Thursday. “I think they’ll try and pass the cost on.”
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The concern that businesses will pass costs down the line is one that has been echoed by critics of Trump’s tariff policy. While the president initially announced country-specific reciprocal tariffs, he later revised the plan, imposing a flat 10% tariff on all U.S. trading partners—except for China, where tariffs were hiked sharply to 125%. While the modification may appear like a retreat, it does little to minimize the impact. A significant portion of consumer goods purchased in the U.S.—from electronics and clothing to household items—still originate from China. The burden of these elevated costs will likely be felt in everyday prices.
Jassy’s comments come on the heels of his annual shareholder letter, where he outlined Amazon’s efforts to absorb the shocks of the new trade policy. The company has taken preemptive measures such as “strategic forward inventory buys” and renegotiating purchase orders to manage rising procurement costs. However, such strategies offer only temporary relief.
Already, signs of strain are emerging. Amazon has begun canceling direct import orders for some products sourced from China, according to supply chain consultants who spoke to CNBC. Some vendors, particularly in the home goods and kitchenware categories, had their shipments ready at Chinese ports, only to be informed via Amazon’s internal Vendor Central system that their orders had been canceled without warning.
The cancellations mark a pivotal shift in how Amazon handles inventory from its vast third-party ecosystem, many of which rely heavily on Chinese manufacturing. The company, often seen as a bellwether for broader retail trends, is now navigating growing uncertainty as its sellers struggle to adapt to the new cost environment.
There are already signs of changes in consumer behavior. Jassy noted that Amazon has seen “some evidence” of customers stocking up on products in anticipation of price increases, although he cautioned that it’s still too early to determine whether that trend is lasting or just a short-term response.
“People have not stopped buying and in certain categories, we do see people buying ahead,” he said. “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.”
Beyond the retail division, the implications of the tariffs stretch into Amazon’s most lucrative business unit: cloud computing. Amazon Web Services (AWS), which plays a central role in the ongoing artificial intelligence arms race, could face increased costs in building the infrastructure—especially data centers—that underpin AI workloads. Hardware components, semiconductors, cooling systems, and server equipment, much of which is sourced from Asia, are now caught in a web of uncertain pricing.
Still, Jassy projected optimism on that front, highlighting Amazon’s early moves to diversify its supply chain.
“We started that process roughly five years ago,” he said, noting that AWS has broadened its supplier base beyond a single country. “We’re going to keep building.”
Amazon has pledged to invest up to $100 billion this year alone into AI infrastructure and technologies. That level of spending underscores the company’s long-term bet on AI—even amid rising trade costs and geopolitical headwinds.
Nevertheless, the broader economic impact of Trump’s tariff push remains a concern. While the White House has defended the policy as a necessary move to level the playing field and protect U.S. manufacturing, economists and trade experts warn that American consumers are likely to feel the effects more directly than foreign producers. The National Retail Federation, for example, has long argued that tariffs function as a hidden tax on consumers, disproportionately hurting low- and middle-income families who spend a greater share of their income on goods.
And although the blanket 10% tariff offers some predictability, the exception carved out for China—with a steep 125% levy—means that many of the goods Americans rely on will still see sharp cost increases.
That reality is beginning to set in among retailers and manufacturers, who are now grappling with higher procurement costs and logistical hurdles.
For Amazon, the challenge is to remain price-competitive while navigating a dramatically altered trade landscape. Jassy’s comments suggest the company is committed to shielding consumers from the brunt of the impact where possible, but ultimately, the arithmetic may prove difficult to avoid.