570: Trump’s Tariffs Are Coming: What Amazon FBA Sellers Must Do To Survive

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Trump’s proposed tariffs (a 10% global tariff and a 60% tariff on Chinese goods) will hit Amazon FBA sellers, but nowhere near as hard as the headline numbers suggest. Even if the full 60% China tariff passes exactly as proposed and gets fully absorbed into your cost of goods, the actual retail price increase on Amazon is closer to 15% than 60% because of the standard 4x retail markup. In practice, the tariffs will most likely roll out in staged brackets (like Trump’s first term, where his 45% campaign promise became a mix of 7.5% and 25% by product category), consumer prices will rise about 1% to 15% depending on category, and Amazon FBA sellers who source from China will absorb some of the cost rather than pass all of it through, because Amazon rankings collapse with even a 60-cent price bump.

This post is my take (as an ecommerce seller who has sourced from China for 17 years and sold on Amazon since 2014) on why the tariff numbers everyone is panicking about are almost certainly overstated, what actually happened last time under Trump 1.0, and what Amazon FBA sellers should do right now before late January.

Below I cover Trump’s proposed tariff policies, what a 60% China tariff would really do to Amazon prices, why sourcing outside China is harder than most sellers realize, and the exact playbook for Amazon FBA sellers to prepare over the next four to eight weeks.

Key takeaways

• Trump has proposed a 10% global tariff and a 60% tariff on Chinese goods. Over 70% of the products sold by wholesalers and retailers on Amazon are made in China, so the exposure is real.
• JP Morgan chief U.S. economist Michael Feroli estimates a 60% China tariff would raise the U.S. price level by only about 1% if fully passed through, and less if sellers absorb the cost or shift sourcing.
• In Trump’s first term, his 45% campaign promise on Chinese goods was actually implemented in staged brackets from 7.5% to 25% depending on product category, with many exemptions. Expect the same pattern this time.
• Standard retail markup is roughly 4x cost. A 60% tariff on a $1 product raises the landed cost to $1.60, which at a 4x markup would sell for $6.40 versus $4. Almost no seller passes that full increase through on Amazon.
• Amazon rankings punish price hikes hard. A 60-cent bump can drop your listing from position 1 to position 10, so sellers usually absorb 60% to 100% of a tariff increase to hold the buy box.
• Trump’s proposed corporate tax cut from 21% to 20% or even 15% would offset most of the tariff hit for U.S.-based ecommerce businesses.
• Sourcing outside China is much harder than it sounds because of vertical integration. Many Mexican, Indian, and Southeast Asian suppliers still buy components from China. Chinese factories have also opened plants in Mexico to bypass tariffs directly.
• What to do right now: place your China orders before late January if you are worried, expect higher freight rates in the near term, and plan for a small margin hit over the next two to three quarters, not a business-ending catastrophe.

What are Trump’s proposed tariffs for his second term?

Trump has publicly proposed a 10% global tariff on every imported product regardless of origin, plus a 60% tariff on all products coming from China. That is the campaign promise. History strongly suggests the actual implemented tariffs will be smaller, staggered, and full of category exemptions.

For context on how much exposure Amazon FBA has here, over 70% of the products sold by wholesalers and retailers on Amazon.com today are manufactured in China. A pure 60% tariff on all of them would be a serious event.

The likelihood of that pure 60% tariff actually landing on all Chinese goods is low. Michael Feroli, JP Morgan’s chief U.S. economist, put the probability of a blanket 10% global tariff at relatively low and a blanket 60% China tariff even lower. Expect targeted brackets, not one flat rate.

What would a 60% China tariff actually do to Amazon prices?

A full 60% China tariff would raise the overall U.S. price level by about 1% if fully passed through to consumers, according to Michael Feroli. The effect could be even smaller if sellers absorb part of the cost into margins or substitute suppliers away from China.

That 1% headline number sounds too small. It is not, once you understand retail markups.

In a typical retail environment, products carry roughly a 4x markup. Source a product for $1, sell it for $4. Add a 60% tariff and the sourced cost rises to $1.60. At the same 4x markup, the new retail price would be $6.40, a 60% price hike. Almost no seller does this in practice.

The real-world math looks different. On Amazon, price elasticity is brutal. A 60-cent price increase on that $4 product can drop your listing from search position 1 to position 10, which crushes sales far more than the tariff crushes margin. Instead of raising the price to $6.40, most sellers hold the price at $4 and eat the extra $0.60 of cost. Profit drops from $3 to $2.40, which is a 20% profit hit that reads like a 15% effective discount on the product.

That is what actually happened during Trump’s first term. Most of our products at Bumblebee Linens fell into the 7.5% tariff bracket, not the 25% one, and we barely raised prices in our store at all.

Why the 60% China tariff will probably roll out in brackets

Trump’s proposed 60% tariff will almost certainly be implemented in staged brackets by product category rather than as a single flat rate. That is exactly what happened in his first term.

Trump 1.0 campaigned on a sweeping 45% global tariff on Chinese goods. What actually got implemented was tariffs from 7.5% to 25% depending on the product category, with numerous exemptions. Many everyday consumer goods landed in the low 7.5% bracket. The rhetoric was 45%; the reality was much softer.

There is a logical reason for the bracket approach. It makes no policy sense to tariff products the U.S. does not manufacture at all, because you cannot substitute domestic production for something no one here makes. The highest tariffs will probably target industries where the U.S. is actively rebuilding domestic capacity, like automotive, semiconductors, and consumer electronics.

Everyday consumer goods, homewares, and low-tech commodity products will likely see much smaller tariff increases. Bold campaign numbers make for stronger political messaging than a spreadsheet of 47 category-specific brackets, so expect the announcement to sound bigger than the implementation.

How Trump’s corporate tax cuts offset the tariff hit

Trump’s proposed corporate tax cut (from 21% to 20% or even 15%) offsets most or all of the tariff impact for U.S.-based ecommerce businesses. That was the story of Trump 1.0: tariffs went up, but the corporate rate dropped from 35% to 21%, and small businesses like mine ended up making much more profit than before, not less.

For a typical Amazon FBA business with a 20% net margin, a further corporate rate cut from 21% to 15% is a large annual tax savings that goes straight to the bottom line. That savings alone can more than offset a small tariff-driven margin hit.

The right framing for FBA sellers is not “tariffs will kill me.” It is “my landed costs go up by X, my competitors go up by the same X, my corporate tax rate drops, and I can adjust prices modestly across the board.” When everyone’s costs move together, the competitive impact is much smaller.

Can Amazon FBA sellers source outside China to dodge tariffs?

Sourcing outside China (Mexico, India, or Southeast Asia) is a real strategy but is much harder than most tariff-panic articles imply, for four reasons: cost, vertical integration, quality lead time, and Chinese factories already bypassing tariffs through Mexico.

On raw cost, China is still cheaper than almost every alternative. Chinese labor costs are about 4x lower than U.S. labor. Even a 60% tariff often leaves China cheaper on landed cost than Mexico or the U.S. for most product categories.

China’s vertical integration is the underrated moat. Most products are assemblies of many components, and China has suppliers for virtually every component in close geographic proximity. Take the iPhone: even a U.S.-assembled version still needs chips from TSMC in Taiwan, RAM from Korea, and PCB components from China. Replicating that supply-chain density elsewhere takes decades, not one presidential term.

We ran into this exact problem when we sourced intricate lace handkerchiefs from an Italian supplier. The materials still came from China. We were paying an Italian markup for the same Chinese inputs. This is common in “Made in Mexico” and “Made in India” too.

And Chinese-owned factories have already set up operations in Mexico specifically to sell into the U.S. tariff-free, since Mexico has no U.S. tariffs today. Chinese manufacturers are always three steps ahead of tariff enforcement.

What Amazon FBA sellers should do right now (before late January)

Amazon FBA sellers who source from China should place their orders now (before Trump takes office in late January) and get inventory into the U.S. as fast as possible. Expect freight rates to spike in the short term because every other seller is doing the same thing, then normalize once the initial rush ends.

Concrete steps for the next four to eight weeks:

• Place reorders now on your top-velocity SKUs to lock in pre-tariff pricing on 60 to 120 days of inventory.
• Get product into the U.S. before late January if possible, expecting freight rates to rise 10% to 30% in the short term.
• Model your worst case at a full 25% tariff on your specific product category, not the 60% headline. Most consumer categories historically fall in the 7.5% to 25% range.
• If your margin is under 15%, plan a modest price increase (roughly 5% to 10%) once competitors move first. Do not lead the price hike on Amazon.
• Look at Chinese factories with Mexico operations as a medium-term hedge. Do not switch primary sourcing on a rumor.

Longer term, tariffs actually give the U.S. some real negotiation leverage that has been missing for years. China has enjoyed structural advantages for a long time, and even imperfect tariffs will help rebalance parts of that.

What Trump’s presidency means for Amazon FBA overall

Trump’s second term is likely net neutral for Amazon FBA sellers, and possibly slightly positive. Tariffs add cost. Lower corporate taxes add profit. And ongoing FTC scrutiny of Amazon (which will almost certainly continue under Trump because of his well-known Bezos and Washington Post feud) probably forces Amazon to behave better toward sellers.

Amazon was already sued by the FTC in 2023 for illegally maintaining its monopoly. That case is proceeding. Trump has repeatedly called Amazon a monopoly, so the antitrust pressure is not going away. That is why Amazon suddenly announced no fee changes for 2025, which is the first good news for FBA sellers in years.

Net-net for FBA: small margin headwind from tariffs, small margin tailwind from taxes, and slightly better Amazon behavior because the FTC is watching. Not the doomsday scenario the media is selling.

Frequently asked questions

How much will Trump’s tariffs raise prices for U.S. consumers?

According to JP Morgan chief U.S. economist Michael Feroli, a full 60% tariff on Chinese goods would raise the overall U.S. price level by only about 1% if fully passed through to consumers, and possibly less if sellers absorb the cost or shift sourcing to other countries. Individual product categories with heavy China exposure will see larger increases (typically 5% to 15%), while categories with domestic production may barely move.

Will a 60% China tariff really increase Amazon prices by 60%?

No. A 60% tariff on the cost of goods does not translate to a 60% retail price increase because retail products carry roughly a 4x markup. A $1 sourced product with a 60% tariff has a new landed cost of $1.60, which at a 4x markup would price at $6.40, but almost no Amazon seller passes the full increase through because a 60-cent price bump can drop their listing from position 1 to position 10. Expect actual Amazon price increases in the 5% to 15% range on China-sourced products.

Should Amazon FBA sellers order more inventory before Trump takes office?

Yes, if you source from China and expect a tariff impact on your category. Placing reorders now on your top-velocity SKUs locks in pre-tariff pricing for 60 to 120 days of inventory and buys you time to see how the tariff brackets actually roll out. Expect freight rates to rise in the short term because most other sellers are doing the same thing.

Can Amazon FBA sellers just source from Mexico or India instead?

Sourcing outside China is possible but much harder than it sounds. China is still cheaper on raw cost (labor is about 4x lower than the U.S.), and China’s vertical integration means that many Mexican and Indian suppliers still buy their components from China. Chinese factories have also opened plants in Mexico to sell into the U.S. tariff-free, so “Made in Mexico” can still be Chinese-made economically.

Did Trump’s first-term tariffs actually hurt Amazon FBA sellers?

Trump’s first-term tariffs on China had a much smaller impact on Amazon FBA sellers than the media predicted. His 45% campaign promise landed as staged brackets from 7.5% to 25% by product category, with many exemptions. Combined with the corporate tax cut from 35% to 21%, most U.S.-based FBA sellers made more profit during his first term, not less.

Will Amazon Prime prices go up because of Trump’s tariffs?

Amazon Prime membership pricing is separate from tariffs and is driven by Amazon’s internal cost structure and pricing strategy. Tariffs would raise the cost of goods on Amazon’s third-party marketplace, which Amazon usually passes to sellers rather than absorbing. Amazon has announced no third-party seller fee changes for 2025, which is a first, likely driven by ongoing FTC pressure.

Is now a good time to start an Amazon FBA business with tariffs coming?

Yes, tariffs do not fundamentally change the case for starting an ecommerce business. Trump’s proposed corporate tax cuts (from 21% to potentially 15%) are one of the biggest reasons to be a business owner rather than a W-2 employee, because business owners get deductions and preferential rates that employees never see. The tariff hit is real but manageable, especially for categories with modest China exposure.