Amazon Demands Up to 30% Supplier Discounts Amid Tariff Pressure

13 January 2026, according to the Financial Times, Amazon, the world's largest e-commerce platform, is pressuring suppliers to offer discounts of up to 30 percent to offset potential tariff impacts. The move primarily targets suppliers of goods originating from China, as Amazon seeks to protect its profit margins while preserving its competitive reputation for low prices.

Discount Expectations and Negotiation Strategy

Amazon is requesting discounts ranging from low single digits (around 2–5 percent) to as high as 30 percent, depending on product category and supplier scale. Some suppliers report requests for 'low double-digit' reductions of around 10–19 percent, particularly affecting tariff-sensitive sectors such as electronics and household goods.

To secure these concessions, Amazon has accelerated its annual negotiation cycle by several weeks and is shifting tariff payment responsibilities to suppliers, along with additional marketing and promotional costs, in exchange for comparatively smaller discount concessions. In 2025, Amazon had agreed to increase payments to suppliers for tariff-affected products to secure minimum profit margins. It is now seeking to reverse those concessions, citing lower-than-expected tariff impacts following Trump's partial tariff rollbacks and several trade agreements.

Alongside direct negotiations, Amazon has reportedly taken additional measures including importing Chinese goods earlier to avoid tariff deadlines, cancelling certain Chinese orders, and considering — though later denying — plans to display tariff surcharges on its website.

Categories and Sellers Most Affected

The initiative primarily targets Chinese imports. A significant share of Amazon's platform relies on Chinese supply chains, either through direct sourcing or via third-party sellers. Around 60 percent of Amazon's sales come from third-party sellers, many of whom source from China or are Chinese-based themselves. Since November 2024, Chinese sellers have accounted for more than 50 percent of Amazon's platform. The remaining 40 percent of Amazon's sales come from Amazon's own-brand products, many of which are also sourced from factories in China.

Supplier advisers state that Amazon is actively taking steps to recover lost profits. Amazon has confirmed that its negotiations will factor in all operating cost pressures, including tariffs, supply chain disruptions, raw material expenses, and labour costs. Reports also suggest the company is aiming to conclude negotiations before the US Supreme Court rules on the legality of current tariffs.

Financial and Strategic Context

Goldman Sachs estimates that tariffs could reduce Amazon's annual operating profit by 6–12 percent, equivalent to approximately USD 5–10 billion. With already narrow profit margins, Amazon is pressing suppliers to cut prices to help absorb rising costs while continuing to offer low consumer pricing.

The US Supreme Court is expected to rule this week — anticipated on 14 January 2026 Eastern Time — on the legality of Trump-era tariffs. If overturned, suppliers stand to benefit; if upheld or extended under alternative legislation, tariff pressure will continue. Amazon has not joined ongoing anti-tariff litigation, including a class action brought by more than 1,000 retailers such as Costco, instead opting to adjust its internal commercial strategy.

Supplier Reaction and Growing Tensions

Suppliers and consultants describe Amazon as an '800-pound gorilla', emphasising that many brands rely heavily on the platform with limited alternatives. However, they argue that Amazon's demands do not sufficiently account for continuing supply chain disruptions or rising raw material and labour costs, potentially putting product profitability at risk.

Some sellers report that when they attempt to raise prices on the platform to offset tariff-related costs, Amazon penalises them, including through loss of 'Buy Box' placement — a move that further increases pressure on suppliers already facing heightened operational challenges.