- Amazon CEO Andy Jassy warns that shopping could become more expensive thanks to tariffs
- Retail operates on mid-single-digit margins, so absorbing is not an option
- PC industry faces similar pressures from AI demand
Amazon CEO Andy Jassy warned that import and export tariffs imposed by the Trump administration are now beginning to be reflected in the prices of the company’s products, increasing financial pressure for customers around the world.
“You don’t have infinite options,” he explained in an interview with CNBC. before the Davos economic forum.
Jassy recently explained that the tariffs had not initially affected consumer prices, thanks to stockpiling efforts. However, without tariff easing, prices remain high and stocks low.
Trump’s tariffs are having a knock-on effect for consumers
Although companies like Amazon had stockpiled inventories ahead of price hikes to prolong lower prices as long as possible, supplies are running out and tariff-influenced pricing is becoming commonplace.
This now leaves suppliers with two options: pass those higher costs on to consumers or absorb them.
Jassy explained that Amazon’s focus will be to pass those costs on to consumers, and the CEO explained that tight retail margins make it impossible to absorb additional costs. Given that retail operates on mid-single-digit margins, a 10% cost increase is pretty catastrophic.
Retail trade groups had previously warned that tariffs could lead to higher prices and reduced product availability. “I think we’re starting to see more of that impact,” Jassy added.
As a result, purchasing behavior has changed in recent months, with a greater concentration on purchasing cheaper items and delayed purchases of premium products.
The PC industry is also coming under similar pressure, with stocks dwindling as manufacturers focus on high-value AI components. The result is that high-end products with higher margins are slightly more protected from price fluctuations, while budget devices are shedding inferior components to stay at their low prices.
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