Amazon Faces a Complex China Calculus as Trade War Continues

Over the past decade, Amazon tied itself to China. Now, it'll have to get creative to stop its pricing from outpacing inflation. I think there's a way it comes out stronger.

A decade ago, only 10% of Amazon sellers were based in China. Today, it’s more than 60%, and that’s no accident.

Amazon tied itself to China to broaden its selection, lower its prices, and fend off Chinese competitors selling directly to U.S. buyers. And late last year, it even introduced Amazon Haul, an emoji-sprinkled Temu and Shein competitor that sells Chinese products priced under $20.

But then came Trump’s tariffs, throwing Amazon’s China bet into question.

As negotiations (and posturing) continue, Trump’s 145% tariff on Chinese goods are likely a thing of the past, but the final rates may hover above 50%. The cost increase, at least in part, will be passed along to customers, negating a chunk of the strategy’s rationale. Amazon’s Haul team disliked the duties so much it considered breaking out tariff costs on its product listings, a now-shelved concept that drew Trump’s ire.

This year, Amazon’s U.S. prices for goods made in China are rising faster than inflation, according to a DataWeave analysis, and the company’s cancelled some orders for Chinese products for its Amazon Basics brand. Not exactly ideal.

Amazon will have to navigate this challenge by relying on its trademark strengths: Its long-term seller relationships, logistics muscle, expanding physical footprint, and multiple markets across the globe. The trade war will change its business in complex ways, and perhaps event for the better in some areas.

Here’s how I see things playing out: