The eCommerce giant has asked for discounts from suppliers of up to 30%, the Financial Times (FT) reported Tuesday (Jan. 13), citing interviews with vendor consultants who negotiate on behalf of brands and suppliers.
These sources said Amazon had accelerated discussions with some suppliers by several weeks, and in some cases looked to set a Jan. 1 deadline. This uptick in dealmaking came in advance of a Supreme Court decision on the legality of the tariffs, expected this week.
“Our annual vendor negotiation cycles have not changed, and they begin at different times depending on category,” Amazon said in a statement provided to PYMNTS.
“As part of our standard process, we’re continually working with our broad, varied range of valued selling partners in our store to support them in adapting to the evolving environment while maintaining broad selection and low prices for customers.”
The company added that it operates a range of businesses with a variety of cost structures, with negotiations based on numerous factors, and it tries to factor the pressures facing vendors into its negotiations.
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The report notes that Amazon last year agreed to raise the price it paid to some suppliers for tariffed products in exchange for the suppliers guaranteeing minimum margins. That meant brands would take the hit if a product’s sale price on Amazon dropped, the FT said.
Now, Amazon is trying to reverse those concessions, the sources told the FT, arguing that the tariffs have been less severe following reductions and trade deals by the White House.
“Amazon is moving aggressively to recoup any lost profit,” Kara Babb, a consultant and former Amazon vendor manager, told the FT.
PYMNTS wrote last week about some of the strategies other companies have employed to deal with tariffs, such as Apple’s push to shift production from China to India to reduce its exposure to the duties.
Taiwanese electronics manufacturer Asus said in an August earnings call that it had transferred more than 90% of its production of personal computers and motherboards bound for the U.S. market outside of China, setting up shop in Thailand, Vietnam and Indonesia.
And General Motors in June announced a $4 billion investment to move production to the U.S. over the next couple of years.
“Proactive firms aren’t just leaving China — they’re also designing multinode supply and manufacturing footprints so they can redirect flows as policy shifts,” PYMNTS wrote.
“Of course, not every company can afford, logistics- or cost-wise, to move factories. Still, many can pull trade-structure levers that materially change their exposure to the duties, expense timing and magnitude. For example, they can use duty drawback to recoup up to 99% of duties levied on products later exported or destroyed, according to trade lawyers.”
