What do Tariffs Mean for Amazon?

Among Amazon’s cloud computing, advertising, streaming media, TV and movie production, tech devices, and other business segments, Amazon.com retail remains the core. It accounts for the bulk of Amazon’s revenue (although not necessarily profits) and much of that comes from buying stuff overseas and selling it in the US - or facilitating others doing that.

So, tariffs on stuff produced overseas will affect the company. How hard, though, is a little tougher to predict. Will Amazon hold the line on prices and absorb the tariff, insulating its customers and presumably its sales revenue from a shock? Will they raise prices to reflect the increased costs? Something in-between?

For one perspective, we can look at what consumers spend at Amazon over time. Based on the long-term trend, Amazon might not have as much pricing flexibility as one might think.

CIRP has estimated the average single transaction spending by US Amazon customers for the past ten years. In 2024, Amazon customers spent an average of $47 in their most recent order (Chart 1).