Tariffs take bite from Amazon sale discounts

Prime Day will be a test of whether consumers are willing to spend amid mixed economic signals

An Amazon employee puts packages onto a conveyor belt during Amazon’s annual Prime Day event on July 16 in L.A. County’s South Gate. This year’s Prime Day event began Tuesday and lasts for four days. Richard Vogel — ap

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By Spencer Soper

Bloomberg

Amazon.com Inc.’s Prime Day is slamming into President Donald Trump’s trade war, with ever-shifting tariffs prompting some brands to sit out the summer sale and some shoppers dropping hints they plan to pull back.

The event, which began Tuesday and lasts four days, could provide prognosticators a glimpse of how much consumers are spending and what they’re buying amid mixed signals about the strength of the U.S. economy.

“Prime Day will provide an early indication on consumer appetite, especially in categories like apparel, electronics and TVs, where price drops are expected to be the deepest,” said Vivek Pandya, lead analyst at Adobe Inc., which expects Amazon and other U.S. retailers to generate $23.8 billion in online sales during the four-day event.

Trump rattled global markets in April when he announced “Liberation Day” tariffs on 180 countries and territories, including China. Levies of as much as 145% have since been reduced or delayed to give time for negotiations, but uncertainty lingers like a dark cloud. Trump restoked the unpredictability Monday with warnings to countries including Japan and South Korea that he would impose tariffs if trade deals weren’t reached by Aug. 1.

Prime Day could help clarify economic signals for the rest of the summer.

“Prime Day will be quite a test,” said Romain Fouache, the CEO of Akeneo, which sells software used by online merchants. The firm conducted a survey of 1,000 U.S. shoppers showing that 1 in 4 respondents planned to skip Prime Day due to tariffs while 57% said they would more closely monitor prices.

It’s not just shoppers sitting out the sale. Some online merchants, who provide about 60% of the products sold on Amazon’s web store, say they can’t afford to offer discounts this year because they’re trying to boost prices to offset the increased costs from tariffs.

Take Dan Peskorse, whose Upstream Brands sells aluminum trays that make decorative ice cubes for the cocktail connoisseur. He usually sells his products at cost on Prime Day to promote the brand. But with them subject to 50% tariffs, he’s not offering any discounts for the first time.

“We’re just gonna see what happens this year,” said Peskorse, whose St. Louis-based company generates about $4 million in annual sales, mostly on Amazon. “There’s just no room in the budget for Prime Day discounts.”

Amazon declined to comment about how tariffs affected this year’s event. Executives have said shoppers are trading down to less expensive products, and CEO Andy Jassy has said tariffs have not driven up prices “appreciably.”