There has been a lot of misunderstanding around tariffs and how they affect businesses or consumers. Even those who try to simplify and explain the issue often end up confusing it further\u2014either by failing to clarify who actually pays the tariffs or by inserting personal perspectives instead of taking a holistic approach.<\/p>
The clearest explanation in the media by \u201cecommerce pundits\u201d is that the importer<\/strong> pays the tariffs. In the case of the US (as you\u2019ll see below), a majority of the importers are outside of the US. In fact, only 38% of Amazon<\/a> sellers<\/strong> are based in the US. This number is likely even lower, considering many foreign importers use a US-domiciled address\u2014despite not technically being based in the country.<\/p> The real payer of tariffs is the entity importing the goods, which could be located in any country. However<\/strong>, based on our interviews with major sellers, much of the tariff cost is eventually passed on to the customer. Nearly 100% of the sellers<\/strong> we interviewed stated they won\u2019t proactively use tariffs as a reason to increase their prices. Instead, they plan to hold out with their existing inventory<\/a>, hoping their competitors run out of stock and raise their prices first.<\/p> One way or another\u2014if not immediately, then gradually\u2014the entire cost of tariffs will<\/strong> be passed on to the consumer. There\u2019s no other logical or mathematical outcome.<\/p> Even for my own brand<\/a>, the tariffs would be unsustainable, and I would need to increase prices gradually. The only long-term solution would be to manufacture within the US, which is exactly what the government wants. The political aim<\/strong> behind these tariffs seems to be to kick-start domestic manufacturing. But the aim of this blog post<\/strong> is not to discuss politics\u2014it\u2019s to highlight the effect of tariffs on recent online sales data<\/strong>.<\/p> Why We\u2019re Uniquely Positioned to Share This<\/p> A bit of background: we\u2019re proud to have been named an \u201cAdvanced Amazon Partner\u201d<\/strong> within the Amazon ecosystem. In practical terms, we process a few billion USD<\/strong> in GMV (Gross Merchandise Value) annually for our clients. Since we also analyze their competitors to price products competitively, we often dig even deeper to get accurate insights into sales, revenues, average prices, and profit margins.<\/p> Given the scale of our AI automation<\/a> software\u2014and our no-touch onboarding process\u2014we analyze nearly the entire Amazon ecommerce<\/a> ecosystem at least once a month.<\/p> I recently aggregated anonymized seller data for the latest month in the US and ran some simulations to estimate the impact on average product prices if tariffs go live<\/strong>. One of the most interesting charts shows seller distribution by country in the US Amazon marketplace.
This is true but misses an important distinction: the importer is not necessarily located in the country where the product is being imported.<\/p>
In a seller\u2019s profit<\/a> and loss spreadsheet, tariffs are included in the COGS (Cost of Goods Sold). To maintain consistent profit margins, sellers will need to raise their product prices.<\/p>
That, however, is a political debate and outside the scope of this post (impossible for our brand anyway, as we rely on a Himalayan plant product).<\/p>
This badge is awarded to the top 5% of software companies or agencies that manage Amazon ads<\/a> and FBA (Fulfilled by Amazon) revenues.<\/p>
What the Data Shows<\/p>
You\u2019ll immediately notice that China<\/strong> is the biggest source of Amazon sellers, accounting for slightly more than 20%<\/strong> more than even US-based sellers.<\/p>
(Charts are interactive\u2014you can click on them.<\/em>)<\/p>