Trump tariffs mean higher prices, big losses for Amazon sellers that source from China

Published

3 months ago

April 10, 2025

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President Donald Trump’s aggressive tariff policy on April 2 didn’t just cause mayhem in the stock market. It sent Amazon sellers into a panic.

Many sellers on Amazon count on China for manufacturing and assembly due to lower costs and established infrastructure – up to 70% of goods on Amazon come from China, according to Wedbush Securities. With nearly all imports from China being taxed a staggering 145% under the latest tariffs, Amazon sellers are having to decide whether to raise prices or absorb the vastly increased cost of importing their goods.

Amazon CEO Andy Jassy on Thursday told CNBC that its vast network of third-party sellers will likely “pass the cost on” to consumers. He added that Amazon has done some “strategic forward inventory buys” and looked to renegotiate terms on some purchase orders to keep prices low.

Although Trump temporarily lowered tariffs on most countries to 10% on Wednesday, he doubled down on the huge tariffs on goods from China. Before the pause, average tariff rates under Trump were at the highest level since the Great Depression. The “reciprocal tariffs” were far steeper in regions like Southeast Asia. Tariffs also hit U.S. allies at unusual rates, including 20% on the European Union and previously announced 25% tariffs on Mexico and Canada.

Josianne Boisvert of Canadian-based Portable Winch Co. said she “was in a state of shock” when the tariffs were announced. For 20 years, the company has driven its products an hour to the U.S. border for duty-free shipping to American customers.

“We are questioning ourselves if we just move our focus to Europe,” Boisvert said.

CNBC talked to several Amazon sellers to find out how the new tariffs are having an impact on their decisions about prices and where to manufacture.

Price hikes

In a small warehouse in San Rafael, California, Dusty Kenney showed CNBC hundreds of boxes filled with her PrimaStella brand baby spoons, bento boxes and other kids products. Most of them arrived by sea from China before tariffs went into effect. Paying the added tariffs could put her out of business if they continue, she said.

“I will hold my prices for as long as I can and just absorb those tariffs because I’m already competing against those Chinese sellers that are undercutting me,” Kenney said. Although tariffs will also impact her Chinese-based competitors, the cost of doing business in the U.S. is far higher than in China.

“The administration would like people to think that this is a China problem, and that this is only hurting Chinese-based businesses and helping U.S.-based businesses. But I am a U.S.-based business, let’s be clear,” Kenney said. “Everything’s warehoused here, designed here, photographed here. All the income that comes from that stays here.”

Several sellers said they are considering raising prices if Trump’s tariffs stick around.

The vast majority of products on Amazon are sold by third-parties, but tariffs will also impact the company’s first-party brands.

That includes Amazon Basics-branded batteries, which compete against the likes of Duracell and Energizer by retailing at lower prices, said Jason Goldberg of the Publicis Groupe.

If Amazon has to raise the price of its own batteries, he said, “consumers are likely to have a preference for that well-known, familiar brand.”

The Seattle-based tech company is likely to wait at least six months before passing the tariff costs on to consumers, said Dan Ives of Wedbush Securities.

“The last thing they want to do is right away just pass it to the consumer, because you don’t know how transitory this is,” said Ives, adding that Amazon likely got “well ahead of this” by diversifying its supply chain outside of China.

That’s a strategy many Amazon sellers are also trying.

Amazon did not immediately respond to a request for comment.

Reviving U.S. manufacturing?

Some categories, like toys, have a long history of being manufactured in China and have thus far been exempt from tariffs. Jay Foreman started his career at a toy factory in Brooklyn, New York, about 40 years ago.

Manufacturing migrated to China more than 30 years ago because of, “not only a tremendous workforce, but they’ve invested in the infrastructure to create a toy manufacturing supply chain,” said Foreman, CEO of Basic Fun, which makes popular toys like Tonka Trucks, Care Bears, Lincoln Logs, Tinker Toys, and Lite-Brite.

“Whether you’re making a Tonka Truck in China or an Apple iPhone, they figured it out. They’re making quality product there and it’s tough to replicate elsewhere,” Foreman said.

Workers making Care Bears at a factory in Ankang, China.

CNBC

A lot of toy manufacturing moved to Vietnam, Mexico and India in the last five years because of China tariffs during Trump’s first term, Foreman said. But many of the toy factories there are also owned by Chinese companies, he said.

“So you’re sort of not escaping doing business with the Chinese,” Foreman said.

Other product categories, like teas, can’t easily be grown in the U.S. because of the climate.

“You need high humidity. Usually you need to be at a very high altitude. And those things only come together in certain parts of the world, ” said James Fayal, who runs high-energy tea brand Zest. With its green tea grown in coastal China and black tea in India, Fayal said he’ll have to pass the cost on to consumers because he doesn’t have a U.S. option.

For the brands that do manufacture in the U.S., the tariffs are creating a competitive advantage, those companies said.

“Put our products side by side to a competitor’s that is getting it overseas and it’s a night and day difference,” said Dayne Rusch of Vyper Industrial.

Vyper’s American-made stools and other shop equipment range in price from $350 to $650 while foreign-made alternatives can sell for less than $40, Rusch said.

At the National Hardware Show in March, Rusch said he was approached by many vendors asking if Vyper would consider manufacturing their products.

“There’s a huge opportunity for OEM manufacturers to start taking on more work from these people that were purchasing overseas and start making it here in the United States,” Rusch said.

The other sells that spoke to CNBC said it’s not financially feasible to relocate manufacturing to the U.S., even though it would allow them to avoid tariffs.

Some, like William Su, are moving manufacturing completely out of China, but staying overseas. Su set up a factory for his Teamson brand in Vietnam in reaction to China tariffs during Trump’s first term. He’s now in talks to manufacture in India. Trump hit both countries with significant tariffs last week, although they’re temporarily on hold.

Surrounded by her colorful baby products in California, Kenney told CNBC she considered opening her own manufacturing site.

“But that’s way over my head and out of my budget,” she said. “I would love to be able to manufacture in the U.S., but the truth is that the infrastructure is not there.”

With fewer factories in the U.S. than in China, Kenney said the cost to make her products domestically would be double or triple what she pays now.

“The people in China are hungry for the work,” she said. “They’ll get back to you right away. They make sure you get your shipments right away. They’re on it.”

Ending ‘de minimis’

There is one tariff announcement Trump made that’s a boon for U.S-based sellers like Kenney: closing the loophole known as “de minimis.”

This exemption allowed orders under $800 to avoid paying duties and taxes, and it’s what made absurdly low prices possible on direct-from-China sites like Temu, Alibaba and Shein. U.S. Customs and Border Protection said it processed more than 1.3 billion de minimis shipments in 2024, up from over 1 billion shipments in 2023.

Chinese sellers send small orders directly to U.S. customers to keep shipments under the $800 limit. U.S. sellers like Kenney don’t often qualify for de minimis because they ship in large quantities by the pallet, bringing products to their warehouses for quality checks instead of shipping straight to customers from Chinese factories.

Kenney used to sell her most popular product, a set of six silicone baby spoons, for $9.99 on Amazon. She’s reduced the price to $7.99 to compete with knockoffs that sell for as low as $3 on Temu.

“I’ve even had them rip off all of my photos and content that I’ve created and use it to sell their knockoff products,” Kenney said.

Dusty Kenney showed CNBC some of her PrimaStella brand kids feeding products she sells on Amazon, at her warehouse in San Rafael, California, on March 25, 2025.

Katie tarasov

Trump briefly put de minimis on hold in February. Days later, he temporarily reinstated the loophole because huge numbers of Chinese packages started piling up at U.S. post offices and customs offices ill-equipped to collect duties at such a fast pace.

The president on April 2 again announced that he was ending de minimis, effective May 2.

The White House said “adequate systems” are now in place to collect tariffs. It added that the loophole is being closed to target “deceptive” Chinese-based shippers who “hide illicit substances, including synthetic opioids, in low-value packages to exploit the de minimis exemption.”

Foreman of Basic Fun said his Tonka Truck goes through many layers of inspection before landing on Amazon.

“Anything that comes in on de minimis is not going through that safety scrutiny at all,” Foreman said. “Small packets that might have included a dress or some kind of tchotchke might have been stuffed with illegal drugs or things like that, might be counterfeit, might be bootlegs or knockoffs.”

Some Amazon sellers were benefiting from de minimis, particularly on its separate direct-from-China site Amazon Haul, which launched in November to compete with Temu. But killing de minimis will be a net positive for Amazon because it will hurt competitors like Temu, said Ives at Wedbush Securities.

De minimis is a “loophole that’s been tugging at Amazon really for the last 18 months,” Ives said.

What remains to be seen is how Trump’s tariffs will shift in coming weeks and what tariffs other countries will impose on U.S. goods. Those pose a risk for Amazon and its U.S. merchants that sell to foreign customers.

“It just has a cascading impact across the entire economy,” Goldberg of Publicis Groupe said. “Uncertainty is really bad for business, regardless of who wins or loses on any specific tariff.”

Technology

Microsoft layoffs hit 830 workers in home state of Washington

Published

6 hours ago

July 3, 2025

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Microsoft layoffs hit 830 workers in home state of Washington

Microsoft CEO Satya Nadella speaks at the Axel Springer building in Berlin on Oct. 17, 2023. He received the annual Axel Springer Award.

Ben Kriemann | Getty Images

Among the thousands of Microsoft employees who lost their jobs in the cutbacks announced this week were 830 staffers in the company’s home state of Washington.

Nearly a dozen game design workers in the state were part of the layoffs, along with three audio designers, two mechanical engineers, one optical engineer and one lab technician, according to a document Microsoft submitted to Washington employment officials.

There were also five individual contributors and one manager at the Microsoft Research division in the cuts, as well as 10 lawyers and six hardware engineers, the document shows.

Microsoft announced plans on Wednesday to eliminate 9,000 jobs, as part of an effort to eliminate redundancy and to encourage employees to focus on more meaningful work by adopting new technologies, a person familiar with the matter told CNBC. The person asked not to be named while discussing private matters.

Scores of Microsoft salespeople and video game developers have since come forward on social media to announce their departure. In April, Microsoft said revenue from Xbox content and services grew 8%, trailing overall growth of 13%.

In sales, the company parted ways with 16 customer success account management staff members based in Washington, 28 in sales strategy enablement and another five in sales compensation. One Washington-based government affairs worker was also laid off.

Microsoft eliminated 17 jobs in cloud solution architecture in the state, according to the document. The company’s fastest revenue growth comes from Azure and other cloud services that customers buy based on usage.

CEO Satya Nadella has not publicly commented on the layoffs, and Microsoft didn’t immediately provide a comment about the cuts in Washington. On a conference call with analysts in April, Microsoft CFO Amy Hood said the company had a “focus on cost efficiencies” during the March quarter.

WATCH: Microsoft layoffs not performance-based, largely targeting middle managers

Technology

CoreWeave is the first cloud provider to deploy Nvidia’s latest AI chips

Published

13 hours ago

July 3, 2025

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CoreWeave is the first cloud provider to deploy Nvidia's latest AI chips

Nvidia CEO Jensen Huang in Taipei, Taiwan, on June 2, 2024.

Ann Wang | Reuters

Nvidia’s Blackwell Ultra chips, the company’s next-generation graphics processor for artificial intelligence, have been commercially deployed at CoreWeave, the companies announced on Thursday.

CoreWeave has received shipments of Dell-built shipments based around Nvidia’s GB300 NVL72 AI systems, Dell said on Thursday. It’s the first cloud provider to install systems based around Blackwell Ultra.

The Blackwell Ultra is Nvidia’s latest chip, expected to ship in volume during the rest of the year. The systems that CoreWeave is installing are liquid-cooled and include 72 Blackwell Ultra GPUs and 36 Nvidia Grace CPUs. The systems are assembled and tested in the U.S., Dell said.

CoreWeave shares rose 6% during trading on Thursday, Dell shares were up about 2% and Nvidia rose less than 2%.

The announcement is a milestone for Nvidia.

IPO market gets boost from Circle’s 500% surge, sparking optimism that drought may be ending

Published

14 hours ago

July 3, 2025

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IPO market gets boost from Circle's 500% surge, sparking optimism that drought may be ending

Jeremy Allaire, CEO and co-founder of Circle Internet Group, the issuer of one of the world’s biggest stablecoins, and Circle Internet Group co-founder Sean Neville react as they ring the opening bell, on the day of the company’s IPO, in New York City, U.S., June 5, 2025.

NYSE

For over three years, venture capital firms have been waiting for this moment.

Tech IPOs came to a virtual standstill in early 2022 due to soaring inflation and rising interest rates, while big acquisitions were mostly off the table as increased regulatory scrutiny in the U.S. and Europe turned away potential buyers.

Though it’s too soon to say those days are entirely in the past, the first half of 2025 showed signs of momentum, with June in particular producing much-needed returns for Silicon Valley’s startup financiers. In all, there were five tech IPOs last month, accelerating from a monthly average of two since January, according to data from CB Insights.

Highlighting that group was crypto company Circle, which more than doubled in its New York Stock Exchange debut on June 5, and is now up sixfold from its IPO price for a market cap of $42 billion. The stock got a big boost in mid-June after the Senate passed the GENIUS Act, which would establish a federal framework for U.S. dollar-pegged stablecoins.

Venture firms General Catalyst, Breyer Capital and Accel now own a combined $8 billion worth of Circle stock even after selling a fraction of their holdings in the offering. Silicon Valley stalwarts Greylock, Kleiner Perkins and Sequoia Capital are set to soon profit from Figma’s IPO, after the design software vendor filed its public prospectus on Tuesday. Since its $20 billion acquisition agreement with Adobe was scrapped in late 2023, Figma has been one of the most hotly anticipated IPOs in startup land.

It’s “refreshing and something that we’ve been waiting for for a long time,” said Eric Hippeau, managing partner at early-stage venture firm Lerer Hippeau, regarding the exit environment. “I’m not sure that we are confident that this can be a sustained trend yet, but it’s been very encouraging.”

Another positive sign for the industry the past couple months was the performance of artificial infrastructure provider CoreWeave, which went public in late March. The stock was relatively stagnant for its first month on the market but shot up 170% in May and another 47% in June.

The IPO market is coming back, but it won't be linear, says Lazard CEO Peter Orszag

For venture firms, long considered the lifeblood of risky tech startups, IPOs are essential in order to generate profits for the university endowments, foundations and pension funds that allocate a portion of their capital to the asset class. Without handsome returns, there’s little incentive for limited partners to put money into future funds.

After a record year in 2021, which saw 155 U.S. venture-backed IPOs raise $60.4 billion, according to data from University of Florida finance professor Jay Ritter, every year since has been relatively dismal. There were 13 such offerings in 2022, followed by 18 in 2023 and 30 last year, collectively raising $13.3 billion, Ritter’s data shows.

The slowdown followed the Federal Reserve’s aggressive rate-hiking campaign in 2022, meant to slow crippling inflation. As the lower-growth environment extended into years two and three, venture firms faced increasing pressure to return cash to investors.

‘Backlog of liquidity’

In its 2024 yearbook, the National Venture Capital Association said that even with a 34% increase in U.S. VC exit value last year to $98 billion, that number is 87% below the 2021 peak and less than half the average for the four years from 2017 through 2020. It’s a troubling dynamic for the 58,000 venture-backed companies that have raised a total of $947 billion from investors, according to the annual report, which is produced by the NVCA and PitchBook.

“This backlog of liquidity drought risks creating a ‘zombie company’ cohort — businesses generating operational cash flow but lacking credible exit prospects,” the report said.

Other than Circle, the latest crop of IPOs mostly consists of smaller and lesser-known brands. Health-tech companies Hinge Health and Omada Health are valued at about $3.5 billion and $1 billion, respectively. Etoro, an online trading platform, has a market cap of just over $5 billion. Online banking provider Chime Financial has a higher profile due largely to a years-long marketing blitz and is valued at close to $11.5 billion.

Meanwhile, the highest valued private companies like SpaceX, Stripe and Databricks remain on the sidelines, and AI highfliers OpenAI and Anthropic continue to raise massive amounts of cash with no intention of going public anytime soon.

Still, venture capitalists told CNBC that there are plenty of companies with the financial metrics to be public, and that more of them are readying for the process.

“The IPO market is starting to open and the VC world is cautiously optimistic,” said Rick Heitzmann, a partner at venture firm FirstMark in New York. “We are preparing companies for the next wave of public offerings.”

There are other ways to make money in the meantime. Secondary sales, a process that involves selling private shares to new investors, are on the rise, allowing early employees and investors to get some liquidity.

And then there’s what Mark Zuckerberg is doing, as he tries to position his company at the center of AI innovation and development.

Mark Zuckerberg, chief executive officer of Meta Platforms Inc., during the Meta Connect event on Wednesday, Sept. 25, 2024.

Bloomberg | Bloomberg | Getty Images

Last month, Meta announced a $14 billion bet on Scale AI, taking a 49% stake in the AI startup in exchange for poaching founder Alexandr Wang and a small group of his top engineers. The deal effectively bought out half of the stock owned by investors, leaving them with the opportunity to make money on the rest of their holdings, should a future acquisition or IPO take place.

The deal is a big win for Accel, which led Scale AI’s Series A round in 2017, and is poised to earn more than $2.5 billion in the transaction. Index Ventures led the Series B in 2018, and Peter Thiel’s Founders Fund led the Series C the following year at a valuation of over $1 billion.

Investors now hope the Federal Reserve will move toward a rate-cutting campaign, though the central bank hasn’t committed to one. There’s also ongoing optimism that regulators will make going public less burdensome. Last week, Reuters reported, citing sources familiar with the matter, that U.S. stock exchanges and the SEC have discussed loosening regulations to make IPOs more enticing.

Mike Bellin, who heads consulting firm PwC’s U.S. IPO practice, said he anticipates a diversity of IPOs across sectors in the second half of the year. According to data from PwC, pharma and fintech were among the most active sectors for deals through the end of May.

While the recent trend in IPO activity is an encouraging sign for investors, potential roadblocks remain.

Tariffs and geopolitical uncertainty delayed IPO plans from companies including Klarna and StubHub in April. Neither has provided an update on when they plan to debut.

FirstMark’s Heitzmann said the path forward is “not at all clear,” adding that he wants to see a strong quarter of economic stability and growth before confidently saying that the market is wide open.

Additionally, other than CoreWeave and Circle, recent tech IPOs haven’t had big pops. Hinge Health, Chime and eToro have seen relatively modest gains from their offer price, while Omada Health is down.

But virtually any activity beats what VCs were experiencing the last few years. Overall, Hippeau said recent IPO trends are generally encouraging.

“There’s starting to be kind of light at the end of the tunnel,” Hippeau said.

WATCH: Uptick in VC-backed startup deals