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Will 2017 Give Amazon Sellers Cause for Concern?

by simon
President-elect Donald Trump made statements through the long campaign that, if acted on, could spell trouble for Amazon sellers.

First, there was Trump’s animus for Amazon CEO Jeff Bezos, and owner of The Washington Post. Trump characterized that newspaper’s jaundiced view of his campaign as a function of Bezos’ fear of an antitrust suit.

He asserted on at least two occasions that Amazon was a monopoly. Investors may have interpreted those claims in retrospect to mean the coming Trump administration may pursue an antitrust suit against the eCommerce giant. Amazon’s stock fell 2.68% by late Wednesday morning after the election, while other tech stock (Apple, Facebook and Alphabet) dropped by under 2%.

The Unlikely Antitrust Suit

The worst case scenario in an antitrust suit would be the break-up of Amazon as we know it.

This doesn’t seem likely. The main goal of antitrust suits is to protect consumers from inflated prices due to lack of competition. While Amazon accounts for 15% of total US retail and 20% of eCommerce, it creates the opposite of a monopoly effect. Amazon makes it easy for customers to find the lowest consumer prices possible, and it offers frequent discounts, big sales days, and shipping deals.

A big company, yes, but as far as consumer prices go, an antitrust suit against Amazon would fail and sellers need not worry about it.

The Tariff Question

Trump’s plans for international trade may have a bigger impact on all US importers, including Amazon sellers. Trump said he would slap a 45% tariff on imports from China, part of his stated goal to increase manufacturing jobs in the US.

(One of the reasons Apple shares dropped on Wednesday was likely due to Trump’s warning that it should “start building their damn computers and things in this country, instead of in other countries.”)

This would have the obvious follow-on effect of forcing Sellers importing from China to charge more and/or at a lower profit margin, or to find less expensive sources.

As president, Trump does have the power to impose tariffs without the approval of Congress. But observers believe it is unlikely he will follow-through the proposal because of its impact on consumers.