Trump's Tariffs Topple Tech Stocks. Here's What Amazon Investors Should Know

If you're a existent Amazon investor, oregon idiosyncratic funny successful investing successful Amazon, present are 3 things you should know.

Let's commencement with the atrocious news: These caller tariffs volition astir apt thrust up prices for some Amazon sellers and consumers, peculiarly with the 34% taxation connected goods imported from China.

Although Amazon runs its marketplace, it doesn't ain each the products sold there. Many of the products sold connected Amazon travel from third-party sellers, and galore of them get their merchandise from China. In fact, arsenic of the extremity of 2024, China-based sellers made up implicit 50% of the apical sellers connected Amazon.

With the precocious tariff connected Chinese imports, sellers tin either devour the other costs themselves oregon walk them connected to consumers via higher prices. And considering that galore sellers already run with debased margins, the second is overmuch much likely.

Amazon could assistance its sellers by freezing oregon reducing seller fees, but accommodating a precocious tariff similar this is simply a pugnacious ask.

Although e-commerce is Amazon's breadstuff and butter, its unreality level Amazon Web Services (AWS) is the company's nett machine. In 2024, Amazon's operating income (profit from halfway operations) was $68.6 billion, and AWS accounted for 58% of that ($39.8 billion). AWS is simply a ample portion of wherefore Amazon's operating income has skyrocketed implicit the past decade:

Since astir of the caller tariffs lone impact carnal goods, AWS won't person excessively overmuch occupation since it's providing a integer service. There could beryllium immoderate further costs for the hardware Amazon needs to run AWS (like chips, servers, retention devices, and networking equipment), but this should lone beryllium a comparatively short-term issue. And Amazon could sorb the other costs without passing them connected to AWS customers.

Amazon has been moving to go little reliant connected suppliers for its hardware needs (it introduced 2 caller AI chips successful November 2023), truthful these caller tariffs could marque that much of a priority.