The tariff mayhem is throwing Amazon into uncertain territory.
Forecasting, for example, has become nearly impossible for some teams. One of Amazon’s largest supply chain units recently warned about the challenges of making its second-quarter projections due to tariffs, according to an internal email obtained by Business Insider.
The “volatility and uncertainty” from the new round of tariffs were simply too high to derive any meaningful numbers, the email said.
Amazon employees, alongside suppliers and sellers, are scrambling for answers as President Donald Trump’s whipsaw trade policy roils the country’s largest e-commerce retailer. On Thursday, Amazon was among the hardest-hit stocks when roughly $2.5 trillion was wiped out of the S&P500 Index over Trump’s aggressive tariff plan.
Amazon has given little guidance or financial flexibility so far, according to multiple employees, suppliers, and sellers, who mostly spoke on the condition of anonymity because they were not authorized to talk to the press. Tension is intensifying as concerns of a prolonged trade war and potential recession loom.
Amazon’s spokesperson didn’t respond to a request for comment.
‘Large risk’
The same email from Amazon’s supply chain team said that the near-term impact of tariffs will ultimately be captured and reflected in a later forecast. But the exposure to tariffs and a global trade war is “a large risk” that can set back Amazon’s retail business going forward, it added.
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Some Amazon employees have been in direct contact with its suppliers, commonly known as first-party vendors. These companies sell their products wholesale to Amazon, which then resells them to shoppers.
These vendors said Amazon isn’t willing to pay more for their products, even if the tariffs would increase the suppliers’ costs. According to a March email seen by BI, an Amazon employee encourages vendors to seek further cost savings from their own manufacturers or through government subsidies.
“We understand the challenges posed by the current economic and trade environment,” the email said. “However, we believe there are alternatives to direct cost increases that haven’t been fully explored.”
F. Carter Smith/Bloomberg via Getty Images; Chelsea Jia Feng/BI
Some vendors told BI that Amazon also seeks “margin agreements” that guarantee the same margin after a vendor increases its prices. That way, Amazon would maintain its profit margins from its suppliers, even if it buys the products at a higher price.
In some cases, Amazon is pausing shipment orders from vendors to monitor the market. One shipping company recently told a vendor that “as per Amazon’s request,” it was holding the pick-up schedule of inventory to “mitigate the impact” of tariffs, according to an email seen by BI.
Alan Adams, president of Navazon, a vendor software company, told BI that tariff discussions with Amazon employees have been ongoing for months. He said both Amazon and the suppliers are pursuing ways to adapt to the new market conditions, but the constant policy changes make finding a long-term solution difficult.
“We are all in a wait-and-see mode with a tremendous amount of uncertainty across different categories,” Adams said.
Raising prices
Trump imposed sweeping tariff increases on most countries this week. The changes are expected to increase prices across a variety of goods.
Truist Securities’ Youssef Squali said the tariffs will likely have an adverse effect on e-commerce companies, including Amazon. Import costs will likely eat into their margins, though it will still take time to fully measure their impact on each individual company, he wrote in a note Friday. Amazon’s stock is down roughly 10% from Wednesday.
Third-party merchants who sell on Amazon told BI they will likely have to raise their prices due to the tariffs.
Charles Chakkalo, founder of JoeyzShopping, who sells home and kitchen items, said he anticipates over 50% tariffs on his products. To counter, he will have to raise prices, while leveraging his unit volume to lower manufacturing costs.
Oscar Babarin, managing director of marketing agency Hawke Media, said a number of his clients are feeling the impact deeply. Some of them are scaling back their business, while others are more aggressively pursuing market share, he said.
However, some sellers, are excited about the elimination of the de minimis exemption that allowed tax-free shipments of Chinese imports valued at less than $800, according to Oliver Scutt, board member of Merchant AI. Those sellers expect less competition from Temu and Shein following the change, he said.
Still, most sellers and vendors said they feel helpless against the complexity of trade policies. On Thursday, as the market plunged, one supplier emailed an Amazon manager to ask for additional guidance, only to receive very little support.
“Rest assured, we are looking into it,” the Amazon manager said.
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