The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Jennifer Saba

NEW YORK, May 1 (Reuters Breakingviews) - In the first letter Jeff Bezos wrote to shareholders after Amazon.com’s AMZN.O initial public offering in 1997, he promised that the online bookseller would obsess over customers and prioritize the long haul. To honor those ideals today would mean sacrificing profit margin to absorb some of the steep U.S. tariffs or at least posting the associated costs for consumers. Otherwise, it will send a message that the e-commerce giant is focusing more on the short-term and less on shoppers.

Bezos turned up on President Donald Trump’s radar this week after Punchbowl News reported that Amazon might display specific import levies next to goods for sale. The White House called the move “hostile and political,” even though industries from airlines to food-delivery apps provide similar line-item details. Amazon later said it had been considering such a move only for its low-cost Temu rival Haul, while Trump said Bezos “solved the problem very quickly.”

The president’s trade war nevertheless threatens to stall Amazon’s progress in its biggest retail market, North America. In 2019, operating margin in the region had reached 4% before inflation torpedoed it. The rate recovered to 6% last year, and the so-called everything store reported on Thursday it sustained that level of profitability in the first quarter.

Some companies, including fellow mega-retailer Walmart WMT.N, have said they expect to withstand U.S. tariffs without punishing customers. About 30% of Amazon’s U.S.-sold goods come from China, Bernstein analysts estimate. The rate is even higher for its third-party marketplace. Advertising could be threatened, too. Some sellers on Amazon are already withholding merchandise, according to Reuters, putting boss Andy Jassy in a tough spot.

He could jack up prices, on average, by 12% to offset a 50% tariff on Chinese imports, analysts at Bank of America reckon. With consumers ultra-anxious about the economy, it would be risky to offload the extra expenses onto them. Starbucks SBUX.O and McDonald’s MCD.N are among those to have reported declining sales, which could augur a broader pullback on discretionary spending.

If Amazon is serious about obsessing over customers and avoiding myopia, it would forgo some profit and swallow a portion of the levies. Doing so would help consumers through a rough patch, keep them surfing the site and foster loyalty. Alternatively, Bezos and Jassy could spell out for shoppers how much of their bill reflects Trump's prized tariffs. Amazon republishes the Day 1 manifesto every year to remind stakeholders of its guiding ethos. Now would be a great time to live up to it.

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CONTEXT NEWS

Amazon.com said on May 1 that first-quarter earnings grew 64%, to $17.1 billion, from a year earlier on 9% higher revenue.

Weaker performance in the company’s cloud unit, Amazon Web Services, than analysts were expecting contributed to a 4% fall in Amazon shares in after-hours trading.

Amazon said it expects second-quarter revenue to be in the range of $159 billion to $164 billion, compared to Wall Street’s consensus $161 billion forecast, according to Visible Alpha.

(Editing by Jeffrey Goldfarb and Pranav Kiran)

((For previous columns by the author, Reuters customers can click on SABA/jennifer.saba@thomsonreuters.com))