Amazon was charged by the White House with a “hostile and political act” on Tuesday by its intention to list additional tariff costs on its website. Amazon has refuted the claim, saying it won’t be displaying any additional trade charges.
White House Press Secretary Karoline Leavitt criticized Amazon over reports that suggested the company was considering displaying the added cost of tariff duties on its online platform at a press conference held to mark President Donald Trump’s first 100 days in office.
When the Biden administration raised inflation to its highest level in 40 years, why didn’t Amazon do it? Asks Leavitt.
She further attacked the business, claiming that “Reuters recently wrote that] Amazon partnered with a Chinese propaganda arm” and held up what appeared to be a printout of a news article.
Although Leavitt’s comments caused a temporary drop in Amazon stock after it initially denied the White House’s assertion, it soon recovered.
The retail giant is under increasing pressure from Trump’s new tariffs, which analysts predict will cause higher prices, thanks to the White House’s tirade against it.
And while Amazon asserts that it won’t actively raise the tariffs as the cause of rising prices, other major online retailers are less sappy.
What transpired?
To illustrate how Trump’s tariffs are affecting the cost of goods, Amazon announced on Tuesday that it would soon “display how much of an item’s cost is derived from tariffs right next to the product’s total listed price.”
Instead of making a final decision, the Trump administration’s vehement response to the Punchbowl article appeared to be driven by a misinterpretation of internal plans being considered by Amazon.
Amazon issued a statement less than an hour after Leavitt’s news briefing, claiming that the main Amazon site was never taken into account despite one of its teams having discussed “the idea of listing import charges on certain products.”
A company spokesperson told The Associated Press that only Amazon’s Haul service, which has a recently launched, low-cost storefront, “considered the idea” of listing import taxes on some products. However, he claimed that this “is not going to happen.”
Trump also reportedly called Jeff Bezos, the founder of Amazon, on Tuesday morning to complain about the rumors. After the conversation, the administration appeared to change its tune.
“Jeff Bezos was very kind,” he said. Before flying to Michigan on Tuesday afternoon, Trump declared to reporters that he was fantastic. He “quite rightly and quickly resolved a problem.” He is a trustworthy person.
Are Trump’s tariffs against China an issue for Amazon?
Trump’s tariffs and the targeted nations’ retaliatory measures, particularly China, are expected to raise prices for online retailers and, consequently, American consumers. Amazon will not be harmed.
Last year, Amazon’s US revenues exceeded $600 billion. Its main business strategy is to charge third-party sellers for their visits to its website before using those commissions to pay for its extensive delivery infrastructure.
83 percent of US households used Amazon in 2024. In recent years, the retail giant has switched from selling expensive goods like TVs and video games to more affordable items like laundry detergent and toilet paper.
Revenues have increased in turn. In the US, Amazon processed 5.9 billion delivery orders in 2023, which is a staggering 15.7 percentage point increase over the previous year. Additionally, its share of the US parcel market increased by 16.3 percentage points from the 2022 level.
Amazon accounts for roughly 40% of US e-commerce sales. Third-party merchants, many of whom are based in China, are a significant part of its business model, who can offer competitive prices because of low manufacturing and regulatory costs.
According to a 2024 survey by Jungle Scout, a staggering 71% of the products sold by Amazon in the US are produced in China. That’s 2.5 times more than the volume of products that are imported from the US, to put it in context.
Third-party sellers now have the option of lowering prices or taking on Trump’s tariffs’ additional costs. Many merchants who rely on razor-thin margins are in danger of dying from it. E-commerce will experience a decline.
What do other retailers do?
Trump’s trade policies have been decried by a large number of online retailers. Several well-known companies, including Temu and Shein, Temu’s rivals, have already raised prices, highlighting specifically the cost of tariffs.
In separate, almost identical notes earlier this month, Temu and Shein reported that their operating costs had increased “due to recent changes in global trade rules and tariffs.” On April 25, they both announced price increases.
Temu, owned by PDD Holdings, a Chinese online retailer, now lists more “import charges,” which are said to have doubled the price of numerous items, despite the fact that they currently appear to be exempt.
Shein, which is focused on fast fashion and is based in Singapore, has a checkout bar that now reads, “Tariffs are included in the price you pay.” You’ll never be required to pay extra for delivery.
Temu and Shein have experienced rapid growth in recent years; in fact, in the US in 2023, they were the top two apps in the country. However, their share of the e-commerce market is still much smaller than Amazon.
However, they are still subject to tariffs on Chinese imports.
Nearly half of Temu and Shein’s goods shipments to the United States came from China, or 600, 000 packages a day, according to a US House Select Committee investigation conducted in 2023.
Temu and Shein are attempting to relocate some production lines to the US and maintain more inventory there, along with other e-commerce companies. However, these measures won’t be enough to stop Americans from snub higher prices.
What will happen to consumer prices?
The International Monetary Fund (IMF) predicted that Trump’s unpredictable tariff policies and countermeasures by the country’s trading partners will likely have a significant impact on US prosperity.
The IMF forecast a 2.7% annual growth rate for the US economy at the beginning of the year in 2025. The fund’s projection was lowered to 1.8% after Trump’s “liberation day” tariffs were made public.
Consumer prices are also starting to deteriorate, and the IMF is now reporting a 3 percent increase in US inflation this year, up from the 2 percent forecast for January. Chinese imports will be a significant part of this increase.
Jerome Powell, the head of the US Federal Reserve, warned on April 16 that Trump’s tariffs would have a “challenging scenario” for the central bank and likely lead to higher inflation.
Powell continued, stating that “at least a temporary rise in inflation” was likely to be the result of Trump’s tariffs. He added that “the inflationary effects may also be more pervasive.”
Source: Aljazeera
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