Amazon to Refund Some Tariff Costs After Receiving $600M in Rebates - EUROPE SAYS
Amazonexpects to return a portion of roughly $600 million in tariff refunds it collected in the second quarter back to customers. The e-commerce giant did not specify the amount it could reimburse, but the. . .
Amazonexpects to return a portion of roughly $600 million in tariff refunds it collected in the second quarter back to customers. The e-commerce giant did not specify the amount it could reimburse, but the $600 million represents the “significant majority” of refundsAmazonexpects to receive from U. S. customs, chief financial officer Brian Olsavsky said. In a Thursday earnings call, the CFO said that the company identified a “limited set of circumstances” where it can pass specific import charges on to customers. “When we receive those refunds, we will proactively contact affected customers and automatically issue refunds to them,” he added. According to Olsavsky, Amazon is not the importer of record for most of the items sold on its marketplace. Many third-party sellers, who account for more than 60 percent of sold units on Amazon, often import their goods from overseas and have since applied to receive tariff refunds. “Suppliers typically handle imports and pay relevanttariffs,” Olsavsky said. “In cases where we did see an increase in cost due totariffs, we largely absorbed these costs rather than pass them on to customers. ”Amazon also avoided tariff costs by pulling forward orders and pre-positioning inventory ahead of the levies, he said. Amazon had not previously revealed whether it would reimburse tariff costs after the Supreme Court ruled tariffs levied under the International Emergency Economic Powers Act (IEEPA) illegal earlier this year. The company is currently involved in aclass-action lawsuitfrom consumers regarding its collection of the tariffs arguing that they were owed refunds for paying tariff-inflated prices. The suit accuses the e-commerce giant of seeking to “curry favor” with President Donald Trump, who imposed many of the IEEPA tariffs last April. Trump said earlier this year that he would “remember” the companies that didn’t seek tariff refunds. Top logistics competitorsUPSandFedExhave flagged nearly $6 billion in refunds that they expect to pass along to customers. Retail giants including Walmart, The Home Depot and Costco have all applied for refunds through U. S. Customs and Border Protection (CBP). The tariff refund disclosure was largely eclipsed by the tech titan’s second quarter earnings report, which sent the company stock flying more than 15 percent through Friday morning trading. Net sales at the online marketplace increased 20 percent to $200. 6 billion in the second quarter, with net income soaring 245 percent to $62. 6 billion on diluted earnings of $5. 75 per share. The steep surge in net sales was attributed to the shift in Amazon’s annual Prime Day shopping event, which was moved from July to June this year. The strong earnings report also masked a sharp rise inshipping costsas the war in the Middle East has spiked fuel costs and trucking capacity continues to dwindle, resulting inhigher trucking freight rates. Worldwideshipping costsat Amazon have reached $27. 9 billion, up 19 percent year over year—the highest such jump since a 20 percent escalation in the 2023 first quarter. Year-over-year shipping costs at the company have increased for five straight quarters. “Excluding the impact of higher fuel and line haul rates, shipping costs grew more slowly than worldwide unit growth at a pace that is relatively consistent with last quarter,” said Olsavsky, referring to the 17 percent increase in total units. “On the operating income side, the impact of these higher costs is partially offset by our FBAfuel and logistics surchargethat was implemented in April. ”As those costs climb, delivery at Amazon continues to get faster. The company delivered over 40 percent more items same-day or overnight in the first six months of the year than the same period last year. The Big Tech firm’s 30-minutes-or-less Amazon Now delivery service recorded more than 80 percent growth in both sales and units shipping from quarter to quarter, and served over 60 percent more customers. Elsewhere in Amazon’s sprawling logistics network, the company expects to more than double its fleet of robotic arms, such asCardinal and Sparrow, in 2026. Olsavsky also highlighted progress across the network when it came to optimizing inventory placement, shortening shipping distances, reducing touches per package and improving consolidation rates. The biggest driver of Amazon’s stock rally was its Amazon Web Services (AWS) cloud computing division, whose revenue climbed 37 percent to $42. 2 billion, its fastest growth since the first quarter of 2022. The company said it plans to spend more on AI infrastructure, raising its capital expenditures forecast to approximately $220 billion, up from its prior guidance ofaround $200 billion. The raise accounts for the increase in computer memory prices amid a boom in data center construction.