Amazon's Tariff Strategy Exposed: How It's Picking Favourites Among Suppliers

Amazon, the global retail titan, is navigating the stormy waters of new tariffs with a strategy that's raising eyebrows. As President Donald Trump's trade policies, announced on 7 April 2025, slap hefty tariffs on Chinese imports, Amazon is making calculated moves to cushion the blow for some suppliers, while others are left to fend for themselves.

This selective approach, offering price concessions to certain vendors, hints at a deeper game of favouritism that could reshape its supply chain dynamics. With roughly 40% of Amazon's products coming from vendors and 60% from third-party merchants, the stakes are high.

Let's unpack how Amazon is playing its cards.

Selective Price Concessions: Who Gets the Lifeline?

Amazon's response to the 125% tariff hike on Chinese goods is far from equal. Some vendors have secured price concessions to offset soaring costs, allowing them to keep prices competitive without gutting their margins.

Yet, others face rejection when requesting similar relief, with Amazon suggesting they 'explore cost-saving options' like tapping unused factory capacity in China or seeking government aid. This uneven treatment has smaller suppliers feeling sidelined, struggling to match the pricing power of Amazon's chosen partners.

The logic appears strategic: Amazon is prioritising vendors with high-demand products or significant market clout. 'Amazon is not willing to suffer a mass exodus of vendors all at once,' said Matt Daubenspeck, director of Apothecary Products, underscoring Amazon's need to secure key inventory.

With customers ready to switch to competitors like Walmart if products disappear, Amazon's selective concessions keep popular items flowing, even if it means favouring some over others.

Why Favouritism? Safeguarding Profits

Amazon's moves are rooted in protecting its low-price, high-selection model against tariff-driven cost spikes. By granting concessions to key vendors, Amazon stabilises prices on top-selling goods, sparing customers from sudden increases.

Tariffs could add £7.8 billion ($10 billion) to consumer costs yearly, per economic estimates BBC. However, this strategy risks alienating smaller vendors, who lack the resources to absorb losses or shift production to pricier alternatives like Vietnam or India.

Amazon's playbook isn't new: during the 2020 pandemic, it offered concessions outside standard cycles to maintain supply chains. Today's tariff crisis, though, is larger in scope. By supporting select suppliers, Amazon secures loyalty from major players while hoping others can endure independently, preserving its market dominance, valued at £1.1 trillion ($1.4 trillion).

The Ripple Effect: Winners, Losers, and Shoppers

Amazon's strategy reshapes the ecosystem. Smaller vendors, denied concessions, must either eat losses or raise prices, risking their 'Buy Box' status, which drives sales CNBC. For shoppers, this could mean pricier niche products as third-party sellers pass on costs.

Favoured vendors, meanwhile, maintain stable prices, skewing competition. Over time, struggling suppliers may exit, reducing product variety and leaving consumers with fewer options.

Critics argue that Amazon's approach undermines fair competition, potentially consolidating its market dominance further—already valued at £1.1 trillion ($1.4 trillion).

Supporters, however, see it as a practical response to trade upheaval, ensuring the platform remains reliable for millions. As tariffs disrupt global markets, Amazon's selective tactics reveal a company balancing profit with pragmatism, even at the cost of equality.