Amazon CEO says Trump's tariffs are raising product prices
What's the story
Amazon CEO Andy Jassy has said that the tariffs imposed by US President Donald Trump are beginning to affect consumer prices. The comments were made during an interview with CNBC at the World Economic Forum in Davos, Switzerland. Jassy noted that both Amazon and third-party sellers had preemptively stocked up on inventory to avoid price hikes due to these tariffs. However, he said this buffer has mostly been exhausted now.
Pricing strategies
Tariff impact on pricing strategies
Jassy revealed that the impact of tariffs is now being reflected in some prices. He said, "Most of that inventory ran out last fall. So you start to see some of the tariffs creep into some of the prices, some of the items." The Amazon CEO also noted that sellers are now adopting different strategies to deal with these cost pressures. Some are passing on higher costs to consumers through price hikes while others are absorbing them to maintain demand.
Cost absorption
Amazon's response to rising costs
Jassy emphasized that Amazon is doing its best to keep prices low, but admitted there are limits. He said, "Retail is 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." Despite these pressures, he said consumers remain resilient and continue to spend. However, Jassy did note some changes in buying behavior due to rising costs.
Consumer shifts
Shifts in consumer behavior amid rising costs
Jassy observed that some consumers are opting for cheaper products and looking for discounts, while others are postponing purchases of expensive discretionary items. This change in behavior comes as a response to the rising costs triggered by Trump's tariffs. Despite these changes, Jassy remains optimistic about Amazon's consumer base, saying they have fared well so far.