That's what I was thinking too. Also, that isn't the right way to install the step wedges. There should have been a wood wedge driven in first, then a metal step wedge at 90* to the wood wedge.
Lack of a wood wedge to spread the top (flush) would make sense of the pic. The handle would have been rough hewed and cut to allow a wood wedes; so it looks too narrow when the wedge is missing. It probably feels tight because the bottom geometry is correct.
If the above is true, I have a hard time believing the handle will stay tight.
Williams has a lifetime warranty so they will probably cover the fix, but the OP would be out postage. Not sure that's much of a cost savings given its a sledge.
The Amazon return policy would probably cover that, but you'd need to document its OEM defect..
Personally, I would send a PIC to Williams (at snap on industrial brands CS email) and confirm if the handle is correctly assembled and within their spec. If they say its OK, I would just keep it and use it.
If they idenctify a mis-construction, I would call amazon and have the item returned with postage on Amazon, or assuming it was "new" and not a warehouse return, have them send you one for the same price on an exchange.