Amazon’s Earnings Report Looms Large as Trump Tariffs Bite
Amazon’s highly anticipated earnings report, due out on Thursday, is expected to be a closely watched event, with investors eager to gauge the impact of President Donald Trump’s tariffs on the e-commerce giant’s business.
According to a report from CNBC, Amazon’s stock price has fallen 17% this year, and the company is expected to report its slowest rate of revenue growth since 2022. The tariffs imposed by Trump on Chinese imports, which total 145%, are likely to have a significant impact on Amazon’s retail unit, as the company sources some products from China and many sellers on its third-party marketplace rely on the world’s second-largest economy to make or assemble their products.
As CNBC previously reported, Trump used to refer to Amazon founder Jeff Bezos as "Jeff Bozo," but has recently changed his tune, calling him a "good guy" after the two men had a phone call to discuss the tariffs. The call was prompted by a report that Amazon was planning to display on its site how much the new tariffs on top U.S. trading partners are driving up prices for consumers.
However, Amazon swiftly responded, saying no such change was coming, and that it was only considering displaying the import fees on products sold on its discount storefront, Amazon Haul. According to CNBC, products on Haul cost $20 or less and many of them are sold direct from China using the de minimis trade exemption, which is set to go away next month after Trump signed an executive order.
The clash with Trump highlights the pressure Amazon is under to blunt the impact of Trump’s aggressive tariffs on Chinese imports. As CNBC noted, Amazon CEO Andy Jassy told the news provider earlier this month that the company hasn’t seen a drop-off in consumer demand, but acknowledged that some third-party sellers will "need to pass that cost" of tariffs on to consumers.
Analysts at UBS said in a note to clients that at least 50% of items sold on Amazon are subject to Trump’s tariffs and could become more expensive as a result. "Consumers therefore might have to make more difficult choices on where to allocate their dollars," wrote the analysts, who have a buy rating on Amazon shares.
As reported by CNBC, Amazon has reportedly pressured some of its suppliers to cut prices to shrink the impact of Trump’s tariffs, and some sellers have already raised prices and cut back on advertising spend as they contend with higher import costs. Others are looking to secure new suppliers in countries like Vietnam, Mexico and India, where tariffs are increasing under Trump, but are mild compared with the levies imposed on goods from China.
The impact of the tariffs on Amazon’s business will be closely watched by investors, with Bank of America analysts saying in a note to clients that they see the potential for Amazon to give a "wider guidance range" in its earnings report on Thursday. Analysts at Oppenheimer said investors are "highly uncertain" as to the impact of tariffs on Amazon’s e-commerce business.
In response to the report, Trump said he was pleased with his phone call with Bezos, saying "Jeff Bezos was very nice… He was terrific. He solved the problem very quickly and he did the right thing. He’s a good guy." As CNBC reported, Amazon did not provide a comment beyond its short statement on Tuesday.
The earnings report will also be closely watched for commentary on Amazon’s Prime Day shopping event, typically held in July across two days. According to CNBC, Amazon sellers previously told the news provider they may run fewer deals for this year’s Prime Day to conserve inventory or because they can’t afford to mark down products any further.
For the quarter, Amazon is expected to report earnings per share of $1.37 and revenue of $155.04 billion, according to LSEG, which would represent annual growth of just over 8% and would be the slowest rate of expansion since the second quarter of 2022. CNBC will be providing live coverage of Amazon’s earnings report on Thursday.
