Are Tariffs To Blame for Amazon’s Higher Prices?

Amazon’s chief executive, Andy Jassy, suggests at Davos that President Trump’s tariffs are beginning to “creep into” prices. The entry of the online retail behemoth into the fray over tariffs comes at a time when the legality of the levies is being weighed by the Supreme Court. The economic jury, though, seems unsettled as to whether the tariffs are being borne by American consumers or absorbed by companies including producers and importers. Here in the galley where the editorial writers pull the oars, the view is different. It is that inflation is not the result of tariffs and changes in production and salaries. Inflation is a monetary phenomenon. Or, to oversimplify, a collapse in the value of the dollar as measured by the monetary metal of gold. This is illuminated by the chart at the top of this editorial, which shows a staggering slide in the value of the dollar in gold. No wonder Mr. Jassy is unsettled.We’re not suggesting that Mr. Jassy is entirely wrong to offer a perspective from Amazon. What he’s looking at, though, is not the inflation. He’s looking at the result of inflation — the result of the debasing of the dollar. What Amazon’s price pressure illuminates is a debate that is often freighted with political preconceptions. Of the tariffs, Mr. Jassy tells CNBC, “some sellers are deciding that they’re passing on those higher costs to consumers.”He adds that “some are deciding that they’ll absorb it to drive demand and some are doing something in between.” As for Amazon, Mr. Jassy reckons that “We’re going to do everything we can to work with our selling partners to make prices as low as possible for consumers, but you don’t have endless options.” In June, he’d suggested that the e-tailer had not seen “prices appreciably go up” as a result of Mr. Trump’s regime of tariffs.Those remarks by Mr. Jassy followed an imbroglio between Amazon and the White House after reports that the retailer was considering adding a line item on its customers’ bills showing the extra costs added by tariffs. Mr. Trump was reportedly “pissed” by this plan, and an unnamed White House official griped that “a multibillion dollar company” would try to “pass off costs to consumers.” Amazon soon walked back the idea.At the time, these columns asserted that the contretemps “underscores a hazard for Mr. Trump that will reemerge as the levies start to bite.” Has that moment arrived? A look at inflation data suggests that, at least so far, no jump in prices from tariffs. As our Larry Kudlow puts it, “tariff inflation is virtually nonexistent.” The Peterson Institute for International Economics notes that “investors believe the Fed has largely won its inflation battle.”In the Peterson Institute’s telling, “the pass-through of tariffs to consumer prices has been modest to date,” indicating that “importers have been absorbing the bulk of the tariff changes.” That view tracks with that of analysts at the San Francisco Fed, who explain how the cost of tariffs can be blunted when, say, “businesses that import tariffed intermediate goods may consider reorienting their supply chains.” These businesses, too, can “choose to pass only a portion of the increased cost of inputs to consumers,” the San Francisco Fed analysts aver, if they are “willing to reduce their profit margins to keep the price of final goods relatively unchanged.” Even so, companies’ willingness to do this could have a limited duration, which is one reason why the Peterson Institute cautions that the price impact of tariffs “will change in the first half of 2026.”That’s a reminder that, in the end, someone has to pay for tariffs, as 19th century social scientist William Graham Sumner insisted by asking “if a tariff is not a tax, what is it?” Yet the impact of trade levies is inseparable from a larger problem, the debasement of the dollar. So it is that consumers are attempting to buy goods and services, from Amazon and others, with a currency that is worth less and less when measured against the yardstick of value, gold.

Are Tariffs To Blame for Amazon’s Higher Prices?

Are Tariffs To Blame for Amazon’s Higher Prices?

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