Amazon is facing a potentially massive hit to its bottom line, with losses estimated to reach up to $10 billion, following the latest wave of tariffs announced by former President Donald Trump. These tariffs, aimed primarily at Chinese imports, strike at the heart of Amazon’s supply chain, which depends heavily on products manufactured in China.
Roughly 25% of Amazon’s first-party goods originate from China, making the company particularly vulnerable. With tariffs now being applied to a wide range of consumer goods, Amazon is left with two difficult choices: absorb the costs and take a financial hit, or pass those costs on to consumers and risk losing sales. Either path could severely impact the company’s profit margins.
The pressure is even more intense when it comes to Amazon’s third-party marketplace, which relies heavily on sellers based in China. These sellers, who often drive aggressive pricing and a wide selection of products, are now caught in the crossfire. The elimination of the “de minimis” threshold—previously allowing small-value goods to bypass tariffs—means that many products entering the U.S. from overseas will now face import duties, increasing prices and complicating logistics for sellers.
One of Amazon’s fastest-growing business units—advertising—is also at risk. Chinese sellers, many of whom spend heavily on Amazon ads to boost their visibility, may cut back significantly on ad budgets due to tighter margins and reduced competitiveness. This could result in slower growth or even a decline in advertising revenue for Amazon, threatening one of its key revenue drivers outside of e-commerce.
Internally, Amazon must now weigh the strategic implications of its next moves. Should it focus on maintaining low prices to satisfy its value-driven customer base, or pivot toward supporting U.S.-based sellers, who may not offer the same price advantages? The recent launch of Amazon’s “Haul” store, designed to appeal to budget-conscious consumers, signals that the company is actively exploring ways to cushion the blow. But sustaining low prices while absorbing higher import costs presents a difficult challenge, especially if inflation continues to rise.
Ultimately, Trump’s tariffs are not just a geopolitical maneuver—they are a direct hit to Amazon’s operating model. The coming months will be critical as the company navigates this new trade landscape. Whether Amazon can adapt quickly enough will determine how much of that projected $10 billion it actually loses—or whether it can find a way to turn this pressure into an opportunity.