Here’s a look at a major story developing today: Donald Trump has declared war on Amazon and Jeff Bezos. This follows Amazon’s recent announcement that it will begin displaying tariff costs as part of the price tag on items.
Many companies that depend heavily on goods imported from China are trying to shift the burden of these tariffs. Amazon’s move, similar to what Temu.com has done, will show how much the Trump tariffs are adding to the cost of individual products.
We view this action by Amazon as hostile and political. A question arises: why didn’t Amazon implement this display when the Biden administration oversaw inflation reaching levels not seen in 40 years?. Though, to be fair, inflation and tariffs aren’t exactly the same thing.
This move makes it appear that it’s the American consumer, not China, who is ultimately paying for these policies. This happens because Amazon is choosing to pass 100% of the tariff cost directly onto you.
However, we believe displaying the tariff cost is actually an extremely valuable tool. We wish every website would do this. This feature will allow you to see right up front if an item is “Made in China” and includes a tariff price. It can help you identify alternative options that might be cheaper and aren’t made in China, which will now become very viable choices.
Seeing these costs clearly could prevent people from buying Chinese goods. While many of us have Chinese-made products in our homes or offices, like some desks we’re currently using, knowing the tariff cost up front gives you a choice. For instance, a cheap $70 desk might be affected by a tariff, but you could potentially find a $130 desk from elsewhere without the tariff, and that’s exactly what someone should do. Most people genuinely don’t need to buy almost anything made in China, with pharmaceuticals being a critical exception that America absolutely needs to address. The pandemic lockdowns in 2020, when we struggled to get N95 masks, taught us a lesson there.
This situation underscores the importance of buying American. It’s another reason why we need to work on onshoring critical supply chains here at home to strengthen our own manufacturing capacity. It’s also relevant that, as Reuters recently reported, Amazon has partnered with a Chinese propaganda arm.
Understanding the bigger picture, we know that moving manufacturing back to the United States cannot happen overnight. Previous administrations over the past 25 years have contributed to this situation. While we would have liked to see incentives to accelerate the return of manufacturing, most people understand this is a temporary pain. Just like with Temu yesterday, some people are upset about paying more for items like a dress. But the reality is, if you shop around, you can often find items as cheap as those on Temu or Wish that are made domestically.
The administration is focused on bringing down what they call the terrible Biden inflation. Since January 20th, there has been significant work on this. Priorities include peace deals, trade deals, tax deals, and importantly, deregulation. Deregulation takes time. From a household income perspective, we expect real purchasing increases due to deregulation, which we’ve already seen and anticipate accelerating.
We believe in what is being done with the tariffs. It’s a net positive for America. For example, selling coffee on Amazon – there’s no tariff on our coffee. Hopefully, this will price out imported garbage coffee from China, and people might try our stuff.
There’s a lot of focus right now on Trump’s polling numbers, with some reports suggesting a majority think his policies have made the economy worse. Many in mainstream media seem desperate to rattle Trump’s base with these polls. However, we don’t believe Trump is overly concerned with these early polls. It’s not about how you start, but how you finish, and these things take time – six months, a year, maybe two years. The polling will matter closer to the midterms, which are still 16 to 18 months away. While the polls might show a slight dip, it’s largely because people lack the patience to wait.
Concerns about Amazon’s stock tanking today seem overblown. This morning, there was talk of the stock completely collapsing. But currently, it’s only down about half a percent and is actually up over the past five days. Smart investors understand that achieving these goals will take some time and involve temporary pain.
There is an expectation that the benefits from tariffs – like saved money or earnings – need to flow down. People need tax breaks. Business owners relying on imported products from China should potentially have a 100% tax-deductible rate on tariffs they pay. Measures should be put in place to help small businesses and middle-class families who can’t always afford to buy American, as it is often more expensive. This money needs to start being spread around.
However, we think there’s still time before these specific benefits need to fully materialize, maybe another 3 to 6 months. Factors like low gas prices, strong buying power, and a healthy crypto market provide some buffer.
We always knew fixing this wouldn’t happen overnight. We had hoped for a negotiation or deal with China sooner. But China is also feeling the pain and pressure right now. We are happy to buy American whenever possible.
