Trump tariffs mean higher prices, big losses for Amazon sellers that source from China

President Donald Trump’s forceful tariff policy on April 2 didn’t just cause mayhem in the stock market. It sent Amazon sellers into a panic.

Tons sellers on Amazon count on China for manufacturing and assembly due to lower costs and established infrastructure – up to 70% of goods on Amazon get from China, according to Wedbush Securities. With nearly all imports from China being taxed a rearranging 145% under the latest tariffs, Amazon sellers are having to decide whether to raise prices or absorb the considerably increased cost of importing their goods.

Amazon CEO Andy Jassy on Thursday told CNBC that its monumental network of third-party sellers will likely “pass the cost on” to consumers. He added that Amazon has done some “key forward inventory buys” and looked to renegotiate terms on some purchase orders to keep prices low.

Although Trump pro tem lowered tariffs on most countries to 10% on Wednesday, he doubled down on the huge tariffs on goods from China. Beforehand the pause, average tariff rates under Trump were at the highest level since the Great Depression. The “shared tariffs” were far steeper in regions like Southeast Asia. Tariffs also hit U.S. allies at unusual rates, covering 20% on the European Union and previously announced 25% tariffs on Mexico and Canada.

Josianne Boisvert of Canadian-based Manageable Winch Co. said she “was in a state of shock” when the tariffs were announced. For 20 years, the company has driven its outcomes an hour to the U.S. border for duty-free shipping to American customers. 

“We are questioning ourselves if we just move our focus to Europe,” Boisvert state.

CNBC talked to several Amazon sellers to find out how the new tariffs are having an impact on their decisions about valuations and where to manufacture.

In a small warehouse in San Rafael, California, Dusty Kenney showed CNBC hundreds of crates filled with her PrimaStella brand baby spoons, bento boxes and other kids products. Most of them succeeded by sea from China before tariffs went into effect. Paying the added tariffs could put her out of business if they go on with, she said.

“I will hold my prices for as long as I can and just absorb those tariffs because I’m already competing against those Chinese sellers that are undercutting me,” Kenney said. Although tolls will also impact her Chinese-based competitors, the cost of doing business in the U.S. is far higher than in China.

“The administration choice like people to think that this is a China problem, and that this is only hurting Chinese-based businesses and plateful U.S.-based businesses. But I am a U.S.-based business, let’s be clear,” Kenney said. “Everything’s warehoused here, designed here, photographed here. All the profits that comes from that stays here.” 

Several sellers said they are considering raising quotations if Trump’s tariffs stick around.

The vast majority of products on Amazon are sold by third-parties, but tariffs will also smash the company’s first-party brands.

That includes Amazon Basics-branded batteries, which compete against the likes of Duracell and Energizer by retailing at slash prices, said Jason Goldberg of the Publicis Groupe. 

If Amazon has to raise the price of its own batteries, he said, “consumers are conceivable to have a preference for that well-known, familiar brand.” 

The Seattle-based tech company is likely to wait at least six months first passing the tariff costs on to consumers, said Dan Ives of Wedbush Securities. 

“The last thing they want to do is honourable away just pass it to the consumer, because you don’t know how transitory this is,” said Ives, adding that Amazon favoured got “well ahead of this” by diversifying its supply chain outside of China.

That’s a strategy many Amazon sellers are also fatiguing.

Amazon did not immediately respond to a request for comment.

Some categories, like toys, have a eat ones heart out history of being manufactured in China and have thus far been exempt from tariffs. Jay Foreman started his bolt at a toy factory in Brooklyn, New York, about 40 years ago. 

Manufacturing migrated to China more than 30 years ago because of, “not not a tremendous workforce, but they’ve invested in the infrastructure to create a toy manufacturing supply chain,” said Foreman, CEO of Basic Fun, which acquires popular toys like Tonka Trucks, Care Bears, Lincoln Logs, Tinker Toys, and Lite-Brite.

“Whether you’re making a Tonka Stuff in China or an Apple iPhone, they figured it out. They’re making quality product there and it’s tough to replicate away,” Foreman said.

A lot of toy manufacturing moved to Vietnam, Mexico and India in the go the distance five years because of China tariffs during Trump’s first term, Foreman said. But many of the toy plants there are also owned by Chinese companies, he said. 

“So you’re sort of not escaping doing business with the Chinese,” Straw boss said. 

Other product categories, like teas, can’t easily be grown in the U.S. because of the climate.

“You need high humidity. Mainly you need to be at a very high altitude. And those things only come together in certain parts of the world, ” predicted James Fayal, who runs high-energy tea brand Zest. With its green tea grown in coastal China and black tea in India, Fayal mentioned he’ll have to pass the cost on to consumers because he doesn’t have a U.S. option.

For the brands that do manufacture in the U.S., the tariffs are fathering a competitive advantage, those companies said. 

“Put our products side by side to a competitor’s that is getting it overseas and it’s a twilight and day difference,” said Dayne Rusch of Vyper Industrial. 

Vyper’s American-made stools and other shop equipment latitude in price from $350 to $650 while foreign-made alternatives can sell for less than $40, Rusch told.

At the National Hardware Show in March, Rusch said he was approached by many vendors asking if Vyper would gauge manufacturing their products.

“There’s a huge opportunity for OEM manufacturers to start taking on more work from these people that were acquiring overseas and start making it here in the United States,” Rusch said.

The other sells that spoke to CNBC said it’s not financially applicable to relocate manufacturing to the U.S., even though it would allow them to avoid tariffs. 

Some, like William Su, are heart-rending manufacturing completely out of China, but staying overseas. Su set up a factory for his Teamson brand in Vietnam in reaction to China tariffs during Trump’s essential term. He’s now in talks to manufacture in India. Trump hit both countries with significant tariffs last week, although they’re briefly on hold.

Surrounded by her colorful baby products in California, Kenney told CNBC she considered opening her own manufacturing placement. 

“But that’s way over my head and out of my budget,” she said. “I would love to be able to manufacture in the U.S., but the truth is that the infrastructure is not there.”

With fewer plants in the U.S. than in China, Kenney said the cost to make her products domestically would be double or triple what she the score withs now.

“The people in China are hungry for the work,” she said. “They’ll get back to you right away. They make sure you get your shipments sort out away. They’re on it.”

There is one tariff announcement Trump made that’s a boon for U.S-based sellers peer Kenney: closing the loophole known as “de minimis.” 

This exemption allowed orders under $800 to avoid expending duties and taxes, and it’s what made absurdly low prices possible on direct-from-China sites like Temu, Alibaba and Shein. U.S. Customs and Purfling limits Protection said it processed more than 1.3 billion de minimis shipments in 2024, up from over 1 billion shipments in 2023.

Chinese sellers send teeny orders directly to U.S. customers to keep shipments under the $800 limit. U.S. sellers like Kenney don’t often fit out for de minimis because they ship in large quantities by the pallet, bringing products to their warehouses for quality check inti instead of shipping straight to customers from Chinese factories.

Kenney used to sell her most popular consequence, a set of six silicone baby spoons, for $9.99 on Amazon. She’s reduced the price to $7.99 to compete with knockoffs that push for as low as $3 on Temu.

“I’ve even had them rip off all of my photos and content that I’ve created and use it to sell their knockoff products,” Kenney suggested.

Trump briefly put de minimis on hold in February. Days later, he for the time being reinstated the loophole because huge numbers of Chinese packages started piling up at U.S. post offices and customs commissions ill-equipped to collect duties at such a fast pace. 

The president on April 2 again announced that he was ending de minimis, crap May 2. 

The White House said “adequate systems” are now in place to collect tariffs. It added that the loophole is being drew to target “deceptive” Chinese-based shippers who “hide illicit substances, including synthetic opioids, in low-value packages to exploit the de minimis release.”

Foreman of Basic Fun said his Tonka Truck goes through many layers of inspection before landing on Amazon. 

“Anything that check in in on de minimis is not going through that safety scrutiny at all,” Foreman said. “Small packets that might be dressed included a dress or some kind of tchotchke might have been stuffed with illegal drugs or tools like that, might be counterfeit, might be bootlegs or knockoffs.”

Some Amazon sellers were benefiting from de minimis, only on its separate direct-from-China site Amazon Haul, which launched in November to compete with Temu. But killing de minimis require be a net positive for Amazon because it will hurt competitors like Temu, said Ives at Wedbush Securities. 

De minimis is a “evasion that’s been tugging at Amazon really for the last 18 months,” Ives said. 

What remains to be seen is how Trump’s assessments will shift in coming weeks and what tariffs other countries will impose on U.S. goods. Those present a risk for Amazon and its U.S. merchants that sell to foreign customers.

“It just has a cascading impact across the entire thriftiness,” Goldberg of Publicis Groupe said. “Uncertainty is really bad for business, regardless of who wins or loses on any specific tariff.”