Amazon and Walmart Overhaul Supply Chains as China Tariffs Bite

When Walmart, the largest retailer in the U.S., abruptly withdrew its first-quarter operating income guidance last week, the message was unmistakable: the tariff storm is shaking the foundations of retail planning. The announcement, citing the need to maintain pricing flexibility amid newly implemented tariffs, is emblematic of the intense pressure facing multinational retailers in a geopolitically charged economic environment.

For retail giants Amazon and Walmart, the realities of today’s macro landscape mark a broader inflection point where the behemoths are recalibrating everything, from procurement strategies to pricing models, in order to stay resilient.

Tariff Ripple Requires Real-Time Strategic Shifts

While the U.S.-led tariff tilt-a-whirl may have been paused for now, the duties in place on China remain. They are continuing to reverberate through the corridors of global retail. For companies like Walmart and Amazon, which rely heavily on Asian suppliers, the increased duties are significantly altering cost structures.

Walmart’s withdrawal of income projections was as much about signaling to investors as it was a logistical recalibration. With cost volatility in imported goods, particularly consumer electronics, apparel and home goods, Walmart needs maneuverability to protect its value proposition: low prices. Maintaining that edge while preserving margins is a delicate balancing act that tariffs make even more precarious.

Amazon, meanwhile, is taking a more aggressive, if quieter, stance. According to reports, the eCommerce titan has canceled orders from several Asian vendors in the wake of the tariffs. These preemptive cancellations are aimed at curbing financial exposure but have also created ripple effects throughout its sprawling supplier network.

In a parallel development, many Chinese sellers on Amazon are facing a stark choice: raise prices or exit the U.S. market altogether. With tariffs sharply increasing logistics and production costs, profit margins have thinned to unsustainable levels. Some sellers have opted to shift inventory to non-U.S. marketplaces, while others are looking to re-source their goods through Southeast Asia or Latin America — regions not currently subject to the same trade penalties.

According to PYMNTS Intelligence research, 60% of CFOs expect the tariffs to bring about additional economic uncertainty and planning challenges. The research also found that almost 70% of finance chiefs foresee supply shortages and product delays, with a similar share executing new costs to restructure their supply chains.

Read more: Walmart Takes Pricing Fight to Suppliers as Amazon Mulls TikTok Bid

Expansion as Defense in Today’s Environment

Even as Amazon trims its vendor list, it’s pushing the boundaries of operational innovation. In a surprising move, the company has begun testing a pilot program that equips its delivery drivers with defibrillators, enabling them to respond to emergency calls en route.

This initiative, while seemingly out of left field, is aligned with Amazon’s long-term playbook: deepen integration into daily life. Beyond potential PR wins and community goodwill, the program could serve as a proof-of-concept for expanding Amazon’s logistics network into new service categories — from healthcare to smart-city infrastructure.

While tariffs tighten profit margins, the battle for consumer loyalty is also pushing retailers to double down on expansion. Sam’s Club, Walmart’s membership-based warehouse chain, has announced plans to open 15 new stores annually. The strategy targets budget-conscious consumers seeking value during times of economic strain.

And amid the scramble to manage tariffs and revamp operations, Amazon is eyeing a different kind of prize: federal software contracts. As the Department of Government Efficiency (DOGE) pushes to overhaul outdated systems, the eCommerce giant reportedly sees an opportunity to anchor itself in the $200 billion government IT market.

Embracing Technology to Innovate and Grow

​In his 2024 letter to shareholders, published Thursday (April 10), Amazon CEO Andy Jassy emphasized the transformative potential of GenAI, stating that it is poised to reinvent virtually every customer experience and enable new ones.

He noted that Amazon is investing aggressively in AI technologies, including the development of custom AI chips like Trainium2, to reduce costs and improve performance. Jassy asserted that companies not planning to leverage these intelligent models risk becoming uncompetitive.

Amazon competitor Walmart is not one of those companies facing that danger. On Wednesday (April 9), Walmart launched Trend-to-Product, a new proprietary tech solution created to support Walmart’s designers and merchants that uses AI and GenAI to analyze and synthesize global data and trends, pulling information from the internet and tastemakers to power the Walmart Fashion team in creating on-trend, high-quality items.

Ultimately, the themes this week highlight the significant impact of recent tariffs on retail strategies and supply chains, as well as the efforts by the world’s largest retailers to innovate and expand their operations in response to evolving market conditions.​