Amazon’s third-party sellers are increasing inventory levels due to new 145% tariffs on imports from China.

This has prompted companies, including Amazon, to reassess their supply chains to manage costs.

Demand remains steady, and average selling prices are stable, though some product categories have seen increased purchasing.

Analysts see this stockpiling as a short-term strategy and warn that prices may rise as inventories shrink in the coming months.

The change coincides with the expected end of the de minimis exemption, which allowed low-cost goods into the US without tariffs. Some sellers may even skip major sales events like Prime Day.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ History shows stockpiling is a short-lived buffer against tariffs

The current inventory buildup by Amazon sellers follows a well-established pattern seen in previous trade disruptions, where businesses frontload imports before tariffs take effect.

During the 2018-2019 tariff escalations, sellers exhibited similar behavior by overstocking inventory, which temporarily distorted market dynamics but couldn’t prevent eventual price increases 1.

This stockpiling strategy typically provides only a 3-6 month buffer before businesses must reorder at higher costs, as highlighted by analyst Gil Luria’s assessment that sellers likely couldn’t stock “more than six months’ worth of inventory.”

The unsustainable nature of stockpiling is evident in data showing Amazon sellers have raised prices by an average of 29% on affected goods since the tariffs were announced, despite the company’s claims of not yet seeing price increases 2.

This pattern creates a pricing lag where initial tariff announcements don’t immediately impact consumer prices, but eventually lead to higher costs once pre-tariff inventory depletes.

2️⃣ Tariffs force permanent supply chain restructuring, not just price adjustments

The current tariff situation is triggering fundamental supply chain revisions that go well beyond temporary price adjustments or inventory management.

Amazon is actively exploring alternatives to Chinese manufacturing, with CEO Andy Jassy encouraging sellers to “move orders to the United States earlier,” a strategy that mirrors broader industry shifts toward supply chain diversification 3.

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