"Foreseeing" tariff refunds? Amazon negotiates "price reductions" with suppliers ahead of the Supreme Court ruling

Amazon is negotiating price reductions with suppliers, aiming to recover concessions made last year in response to Trump's tariffs.

On January 14, the Financial Times reported that multiple consultants representing brands and suppliers revealed that the e-commerce giant Amazon is seeking price reductions from suppliers, with reductions ranging from single digits to as much as 30%.

The report cited insiders who disclosed that to complete the deals before the Supreme Court rules on the legality of U.S. trade tariffs this week, Amazon has not only accelerated negotiations with some suppliers by several weeks but in certain cases even attempted to impose a January 1 deadline.

Amazon stated in a statement that its annual supplier negotiation cycle has not changed and that there is no strict negotiation deadline. The company noted that it began negotiations with some suppliers after the tariff rate was lowered in October last year.

Last year, Amazon agreed to raise procurement prices for certain goods affected by tariffs in exchange for suppliers guaranteeing minimum profit margins. However, as Trump rolled back some tariffs and reached a series of trade agreements, the impact of tariffs has been less severe than initially feared, and Amazon is now trying to reverse those concessions.

A Sprint Before the Supreme Court Ruling

The U.S. Supreme Court is expected to rule this week on whether the Trump administration has the authority to impose tariffs under the International Emergency Economic Powers Act.

The Financial Times reported, citing supplier consultants, that although Amazon's supplier managers did not explicitly mention the case during negotiations, the acceleration of the negotiation process is seen as an attempt to finalize agreements before the ruling.

Martin Heubel, a consultant helping suppliers negotiate with Amazon, stated:

Amazon's argument is that the worst-case scenario that brands feared has not occurred.

After Trump rolled back some tariffs and signed multiple trade agreements, the impact of tariffs has indeed eased. However, analysts believe that if the U.S. Supreme Court overturns the current tariffs, Trump may initiate a new round of tariffs under other laws.

Last year, facing the massive tariffs introduced by Trump in April, the world's largest e-commerce platform made concessions, agreeing to raise procurement prices for goods affected by tariffs. Former Amazon supplier manager and current consultant Kara Babb pointed out:

Amazon is taking aggressive measures to try to recoup all lost profits.

Reports indicate that Amazon is attempting to shift the risk of future trade fluctuations onto suppliers, requiring them to agree to bear the tariff responsibilities for the goods sold. Amazon stated that if suppliers agree to bear the tariffs and increase marketing expenditures, smaller price reductions can be accepted.

Suppliers Facing Profit Pressure

Brands and their consultants believe that Amazon's stance in the latest negotiations threatens the profitability of product lines, as it has not adequately considered the rising costs of goods due to supply chain disruptions and increases in raw materials and labor costs.

Amazon operates its vast e-commerce business under both direct sales and third-party retail models, with third-party seller sales accounting for more than 60% of total sales on the platform. Amazon responded:

We work closely with suppliers to understand all the cost pressures they face—tariffs, supply chains, raw materials, labor—and incorporate these factors into our negotiation considerations It is worth noting that Amazon did not join the lawsuit filed by businesses and interest groups against tariff measures, which includes a class action lawsuit initiated by over 1,000 retailers, including Costco, aimed at recovering paid tariffs