Source : THE AGE NEWS
You could have sold premium-priced tickets (even with a tariff) to listen in on the “feedback” phone call from US President Donald Trump to billionaire Amazon founder Jeff Bezos this week regarding the company’s plan to itemise how the Trump tariff toll could increase prices on Amazon products.
With a metaphorical gun to his head, Bezos backed down.
Amazon furiously back-pedalled, suggesting that only one part of business had floated the idea, and in any event it was effectively a thought bubble and not a serious strategy.
‘Very nice’: Amazon founder Jeff Bezos.Credit: AP
Trump later described the chat between him and Bezos (who engaged in full-throttle capitulation) as a “good call”.
“Jeff Bezos was very nice. He was terrific,” Trump said on Tuesday. “He solved the problem very quickly. Good guy,” said Trump, who sounded more “strong man” than presidential.
It seems unlikely Bezos was feeling the love when he pressed the end-call button.
Trump’s office took the nuclear approach, calling Amazon’s mooted attempt at price transparency a “hostile political act” – a description more suited to sedition or treason.
It is becoming increasingly clear that relationships with Trump only flow one way.
White House press secretary Karoline Leavitt also questioned why Amazon didn’t (itemise the reason for price increases) “when the Biden administration hiked inflation to the highest level in 40 years?” Then it got even crazier as Leavitt reportedly went on to say: “And I would also add that it’s not a surprise because, as Reuters recently wrote, Amazon has partnered with a Chinese propaganda arm.”
Such is Trump and his administration’s sensitivity to any measure of perceived criticism – even from a recent recruit to the Trump billionaire fanboy club – and a person whose company donated $US1 million ($1.6 million) to the president’s inauguration fund.
President Donald Trump ordered Amazon’s Jeff Bezos to back down on price transparency. Credit: AP
It is becoming increasingly clear that relationships with Trump only flow one way.
We have come a long way since Bezos joked in 2015 that he wanted to blast Trump into space on the billionaire’s Blue Origin rocket (with the implication that he would stay there), and inspired the popular hashtag #sendDonaldtoSpace.
It’s the same Bezos who in 2016 accused Trump of using rhetoric that “erodes our democracy around the edges”.
Amazon’s rationale for injecting pricing transparency is kind of understandable – particularly because it was the division called Amazon Haul that was floating the idea. That’s the company’s ultra-cheap business that sells mainly Chinese imported goods and that skirted duties using the de minimis loophole that allowed goods under $US800 to land levy-free.
Last week, Trump closed it so these cheap items could be subject to a 145 per cent duty. One of Amazon Haul’s major competitors, Temu, has already begun detailing to customers the additional costs that the levies will create. Temu is owned by the Chinese e-commerce company PDD Holdings, so outing Trump’s tariff as responsible for increased prices is a risk-free strategy.
However, despite the fact that price transparency in general should be considered best practice for most businesses, for the consumer, breaking down the parts of how the final price is determined doesn’t alter how much they have to pay.
(It’s like those annoying Australian businesses that quote on pre-GST and GST inclusive basis.)
Bezos joked in 2015 that he wanted to blast Trump into space on the billionaire’s Blue Origin rocket. Credit: AP
Trump, whose public popularity is waning in polls, is incredibly sensitive to criticism that his strategy to make America great again is responsible for a cost of living crisis.
But expecting businesses to absorb the cost of tariffs rather than pass them through to consumers falls within the realms of fantasy.
Happier times: Amazon founder Jeff Bezos at Donald Trump’s inauguration ceremony in January.Credit: AP
We could receive another chapter on how this will play out for Amazon when it reports its first quarter earnings on Thursday (US time).
It is expected to produce a robust increase in earnings during the period.
But it will be the commentary on outlook that will be closely watched by Wall Street, which is becoming very familiar with a new-found reticence from major companies to predict profits in what they are calling an unclear macroeconomic environment.
When Trump flaps his wings, the Amazon effect feels like a global earthquake.
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