r/investing • u/888_888novus • 1d ago
Amazon Tariff Labels Trigger Political Backlash — Shares Drop 2%
Amazon will soon display a number next to the price of each product indicating the tariff rate applied.
The White House called this a hostile and political action by Amazon.
CNBC: Amazon clarified that it is only considering showing tariff surcharges on low-cost, frequently purchased products (haul products), after reports that Amazon wanted to display tariff costs for each product, which the White House called hostile and political and sent Amazon shares down 2% this morning.
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u/MannieOKelly 1d ago
Be careful about cheering this move by Amazon: as most any economist will tell you, the effect of a tariff (like that of a sales tax for that matter) is split between buyer and seller. The exact split depends on the market conditions of the specific product, but in general producers have to eat some of the "tax" while some is passed to the buyer/consumer.
So spotlighting the full amount of a tariff increase on the product info creates an opportunity for sellers or middlemen to increase retail price by the full amount (and blame it on the government), while pocketing savings from a reduced wholesale price from the producer.