Shoppers hoping for lower prices in 2026 may need to reset expectations.
Amazon CEO Andy Jassy says tariffs that barely moved prices in 2025 are now starting to show up, and the real impact could hit consumers next year.
Speaking to CNBC at the World Economic Forum in Davos, Jassy explained that many sellers are reaching their limit. After months of absorbing higher costs, they now face fewer ways to protect margins without raising prices.
“So far, we’ve seen some of the tariffs creep into prices,” Jassy said. “Some sellers absorb it, some pass it on, and some do both. But you’re starting to see more of that pressure now.”
Why prices stayed steady in 2025
Last year, tariffs made headlines but caused less pain at checkout than expected.
Several factors helped soften the blow. First, many tariffs ended up lower than originally announced. Second, governments issued exemptions that reduced their reach. Third, businesses stocked up early to avoid higher import costs.
As a result, companies delayed price increases.
“What was threatened and what was actually charged were often very different,” Harvard economist Gita Gopinath told The New York Times.
Data from Yale University’s Budget Lab supports that view. Many firms adjusted purchasing schedules to limit exposure, buying time before passing costs to consumers.
Why 2026 looks different
That buffer is fading.
Retail runs on thin margins, and sustained cost increases leave sellers with limited options. According to Jassy, absorbing higher expenses becomes impossible once costs rise beyond a certain point.
“If costs go up 10 per cent, there aren’t many places to hide,” he said. “You don’t have endless options.”
Research backs this up. A study by Germany’s Kiel Institute found that 96 per cent of tariff costs eventually land on importers and consumers, not foreign exporters.
Smaller businesses feel the strain first. Many tried to hold prices steady to stay competitive. Now, that strategy is breaking down.
“They can only absorb it for so long,” said Kyle Peacock, founder of Peacock Tariff Consulting.
Other companies are sounding the same alarm
Amazon isn’t alone.
Nike has warned that tariffs could add nearly $1 billion to its costs in fiscal 2026. Mattel has flagged potential toy price increases. Walmart has said it may selectively raise prices on imported goods.
Meanwhile, economists at the Peterson Institute for International Economics expect delayed tariff effects to show up more clearly in the first half of 2026—adding pressure to inflation rather than easing it.
What this means for consumers
For now, price increases remain uneven. However, momentum is building.
Unless trade policy shifts or costs ease, more businesses are likely to pass higher expenses down the line. That makes 2026 a riskier year for affordability than many consumers expect.
As Jassy sees it, the question is no longer if tariffs affect prices, but when the full impact arrives.
Amazon CEO Andy Jassy. Illustration: Inc.; Photo: Getty Images
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