- Amazon CEO Andy Jassy warns shopping could become more expensive, thanks to tariffs
- Retail operates on mid-single-digit margins, so absorbing isn’t an option
- The PC industry faces similar pressures from AI demand
Amazon CEO Andy Jassy has warned import and export tariffs imposed by the Trump adminsitration are now starting to be reflected in the company’s product prices, adding to financial pressure for customers everywhere.
“You don’t have endless options,” he explained in an interview with CNBC. ahead of the Davos economic forum.
Jassy recently explained tariffs had not initially affected consumer prices, thanks to stockpiling efforts. However with no easing on tariffs, prices remain high and stock low.
Trump tariffs are having a knock-on effect for consumers
Although companies like Amazon had previously stockpiled inventory before price hikes to prolong lower prices as much as possible, supplies are running out and tariff-influenced prices are becoming commonplace.
This is now leaving vendors with two choices – either to pass on those higher costs to consumers, or to absorb them.
Jassy explained Amazon’s approach will be to pass on those costs to consumers, with the CEO explaining that thin retail margins make it impossible to absorb extra costs. With retail operating on mid-single-digit margins, a 10% cost increase is pretty catastrophic.
Retail trade groups had already previously warned that tariffs could lead to higher prices and reduced product availability. “I think you’re starting to see more of that impact,” Jassy added.
As a result, shopping behavior has changed in recent months, with a greater concentration of buying cheaper items and delayed purchases of premium products.
The PC industry is also undergoing similar pressure with stock dwindling as manufacturers focus on high-value AI components. The result is that high-end products with bigger margins are slightly more insulated against price fluctuations, while budget devices are being stripped back with inferior components to stay at their low price points.
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