Tariffs are Coming! Will Amazon Sellers Bend the Knee?

Winter is Coming... for Amazon Sellers?

My loyal subjects! I Daenerys Stormborn of the House Targaryen First of Her Name Queen of the Andals and the Rhoynar and the First Men Khaleesi of the Great Grass Sea Breaker of Chains and Mother of Dragons bring you tidings of... tariffs? It appears that the King Across the Water Donald Trump has unleashed his own kind of dragonfire – tariffs on goods from China! News reaching my ears is that on April 2 this caused quite the ruckus in the markets and sent Amazon sellers into a tizzy. As if managing a kingdom wasn't enough now even these...merchants... are feeling the burn or as they say are having to decide whether to raise prices or absorb the vastly increased cost of importing their goods.

A Lannister Always Pays His Debts... But Will Amazon?

This Andy Jassy the CEO of this Amazon place speaks of 'passing the cost on' to the consumer. Bah! Sounds like something Cersei would do always making the smallfolk pay for her schemes. But fear not! Amazon claims to be stockpiling inventory and renegotiating deals to keep prices low. Such strategic inventory buys are probably like having a secret dragon egg collection a clever move to avoid being burned by these tariffs. The current King paused tariffs on most countries at 10% on Wednesday but doubled down on China. It's like playing a game of thrones but with trade agreements! In fact before this pause average tariff rates were the highest since the Great Depression these reciprocal tariffs hit US allies at unusual rates. "We are questioning ourselves if we just move our focus to Europe," said Josianne Boisvert of Canadian based Portable Winch Co.

You Know Nothing Jon Snow... About Tariffs!

Dusty Kenney a seller of baby spoons showed hundreds of boxes of her products from China. It could put her out of business if the tariffs continue 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. Even though it hurts those based in China the cost of doing business in the U.S. is far higher. She added "The administration would like people to think that this is a China problem and that this is only hurting Chinese based businesses and helping U.S. based businesses. But I am a U.S. based business let's be clear," Kenney said. Several sellers are considering raising prices if these tariffs stick around.

Fire and Blood... and Higher Prices?

It seems tariffs will also impact the company's first party brands. Batteries for example might see a price hike. Jason Goldberg said "consumers are likely to have a preference for that well known familiar brand." Amazon plans to wait at least six months before passing the tariff costs on to consumers said Dan Ives of Wedbush Securities. He added that Amazon likely got "well ahead of this" by diversifying its supply chain outside of China.

The North Remembers... U.S. Manufacturing?

Some speak of reviving manufacturing in the U.S. – like rebuilding the Wall but for factories! Jay Foreman CEO of Basic Fun says manufacturing fled to China due to their "tremendous workforce" and "infrastructure." A lot of toy manufacturing moved to Vietnam Mexico and India in the last five years because of China tariffs during Trump's first term Foreman said. Some like James Fayal who runs high energy tea brand Zest said he'll have to pass the cost on to consumers because he doesn't have a U.S. option. Others like Dayne Rusch of Vyper Industrial say the tariffs are creating a competitive advantage. Vyper's American made stools range from $350 to $650 while foreign made alternatives can sell for less than $40 Rusch said. William Su is moving manufacturing completely out of China but staying overseas to Vietnam and India. Amidst this chaos Kenney said "I would love to be able to manufacture in the U.S. but the truth is that the infrastructure is not there."

Break the Wheel! (of 'De Minimis')

Finally some good news! Trump is ending the 'de minimis' loophole which allowed orders under $800 to avoid duties. This exemption allowed absurdly low prices on sites like Temu Alibaba and Shein. Kenney said that she's had to reduce the price of her product to compete with knockoffs. Trump briefly put de minimis on hold in February. Now the White House claims "adequate systems" are in place to collect tariffs. This is meant to target those who "hide illicit substances" in low value packages. So killing de minimis will be a net positive for Amazon because it will hurt competitors like Temu. But what will the coming weeks bring? Will there be shifts in tariffs? What tariffs will other countries impose on U.S. goods? "Uncertainty is really bad for business regardless of who wins or loses on any specific tariff," Goldberg of Publicis Groupe said. So let it be written so let it be done! We shall see how these economic battles play out. Perhaps I should send Drogon to... persuade... these leaders to be more reasonable.