Amazon CEO Andy Jassy just signaled a significant shift in how tariffs are hitting the e-commerce ecosystem. Speaking at the World Economic Forum in Davos on Tuesday, Jassy acknowledged that the pre-purchased inventory Amazon and its third-party sellers stockpiled to absorb tariff shocks has largely dried up, forcing a harder reckoning with pricing. What was once absorbed silently is now creeping visibly into consumer prices.
The tariff reckoning that Amazon has been quietly managing since President Trump's initial tariff wave is now becoming impossible to hide. In a Tuesday interview with CNBC's Becky Quick, CEO Andy Jassy laid out the uncomfortable reality facing e-commerce: the buffer strategy of buying ahead stopped working months ago.
"So you start to see some of the tariffs creep into some of the prices, some of the items, and you see some sellers are deciding that they're passing on those higher costs to consumers in the form of higher prices, some are deciding that they'll absorb it to drive demand and some are doing something in between," Jassy said from Davos. "I think you're starting to see more of that impact."
This is a notably different tune from last summer. Back in June, Jassy had told investors that Amazon hadn't seen "prices appreciably go up" several months after Trump's tariffs were announced. The company and its marketplace sellers had executed a coordinated strategy: front-load inventory purchases before tariffs took full effect, then use that stockpile to keep prices steady while absorbing the margin hit. It was a smart play, and it worked for a while.
But here's where the math breaks down. The inventory cushion that lasted through 2025 is now exhausted. When fresh stock arrives and carries the full tariff cost, sellers face a brutal choice. Jassy explained the constraint with blunt honesty: "At a certain point, because retail is, as you know, a mid-single digit operating margin business, if people's costs go up by 10%, there aren't a lot of places to absorb it. You don't have endless options."
That's the core issue. Retail operates on razor-thin margins, typically 2-4% for many categories. A 10% tariff increase can't be hidden in better logistics or negotiated supplier deals. It has to go somewhere, and increasingly, it's landing on the price tag.
Amazon sellers told CNBC back in April they were already considering or implementing price hikes. A major retail trade association that the trade war would create a spring inventory crisis, potentially leading to higher prices, thinner shelves, and job losses. These predictions are starting to materialize.
