Amazon CEO Andy Jassy said Thursday the company is still digesting the impact of President Donald Trump’s sweeping tariffs, but that its vast network of third-party sellers may “pass that cost on” to consumers.
“I understand why, I mean, 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. “I think they’ll try and pass the cost on.”
Amazon’s third-party marketplace is made up of millions of sellers, many of which are based in China or source their products from the region. Third-party sellers now account for about 60% of all products sold on Amazon’s website.
Jassy, who released his annual shareholder letter earlier in the morning, said the company has done some “strategic forward inventory buys” and looked to renegotiate terms on some purchase orders in an effort to keep prices low.
Amazon began to cancel some direct import orders for products sourced by vendors in China this week following Trump’s tariffs announcement, consultants told CNBC. Some vendors of home goods and kitchen accessory items had products ready for pickup by Amazon at shipping ports, only to receive a notification via an internal system, called Vendor Central, that their orders were canceled.
Amazon has seen some evidence of consumers stocking up on items in anticipation of price hikes, but it’s too early to tell how widespread that behavior is, he said.
“People have not stopped buying and in certain categories, we do see people buying ahead, 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,” Jassy said.
Trump last week signed an executive order imposing a far-reaching tariff plan. Within days, he reversed course and dropped country-specific tariffs down to a universal 10% rate for all trade partners except China.
The tariffs could potentially raise costs for businesses building infrastructure to meet the surging demand for artificial intelligence, such as data centers. Amazon’s cloud computing business has been a big beneficiary of that demand, and the company has pledged to spend up to $100 billion this year on AI technologies.
Jassy said Amazon Web Services started the process of diversifying its supply chain roughly five years ago, allowing it to source components from a number of markets, “not just one country.” The company has no plans to slow down the buildout of new data centers, he added.
“We’re going to keep building,” Jassy said.