The media, citing insiders, published information according to which Walmart approached some Chinese suppliers with a request for a major price reduction, as the efforts of this United States retail giant to shift the burden of tariffs imposed by US President Donald Trump faced strong pushback from firms in the Asian country.
The journalists’ informants, who used the right of anonymity, stated that the mentioned actions of Walmart were carried out in a confidential manner. Insiders claim that the retail giant has asked some suppliers, including manufacturers of kitchenware and clothing, to reduce prices by as much as 10% for each round of tariffs. According to media reports, in this case, Walmart seeks to ensure that suppliers pay for duties from the United States.
Insiders said that negotiations are underway with individual manufacturers. They also noted that the price cuts differ by firm.
According to insiders, so far only a few have agreed with Walmart’s initiative. They noted that the margin of suppliers is already razor-thin due to the retail giant’s strategy of procuring goods at a low price to maintain its competitive advantage.
Insiders said that for some of the suppliers, any price reduction of more than 2% would cause losses. They also noted that others have had their own upstream vendors refuse requests to cut prices by more than 3%. Against this background, manufacturers are forced to think about purchasing some components in Vietnam. As one of the mentioned insiders noted, the situation has provoked concerns that the goal of lower prices will be achieved due to a deterioration in product quality.
Walmart’s push is an example of how increasing tensions in the geopolitical relationships space can change global supply chains and become a factor of additional pressure on consumers in the United States, who are already facing difficulties related to the rising cost of living. At the same time, US Treasury Secretary Scott Bessent stated that Chinese manufacturers would eat the extra cost. However, big box retailers Target Corp. and Best Buy Co. warned that shoppers should expect higher prices due to the trade war.
Walmart chief executive officer Doug McMillon said some shoppers are buying smaller packs of goods as they run out of money before the end of the month.
A Walmart spokeswoman stated that the company will continue to work with suppliers to keep prices as low as possible for customers. Also in this context, it was noted that the firm encourages all parties to work on finding common ground that will protect consumers from price increases and continue to contribute to the growth of the United States economy.
The media, citing an insider, notes that Walmart has historically had strong bargaining power over its Chinese suppliers. In this context, it was noted that the company’s requests for lower prices were mostly met. At the same time, it was noted that the scope of the current requests is unusual and is a reason for manufacturers to consider whether it is worth absorbing the costs to maintain a long-term business relationship.
Walmart initially requested price cuts from manufacturers in February when the first round of 10% duties came into effect, the decision about which was made by the President of the United States against goods imported from China. The request for an additional price reduction was received later in February. It happened after Donald Trump threatened to double duties. The relevant information was provided by insiders during communication with media representatives.
Currently, there is a high probability that other US retailers, against the background of the formation of a new trading reality, determined by the tightening of Washington’s trade policy and retaliatory measures from other capitals, primarily Beijing, may follow the example of Walmart. In the relevant context, it is worth mentioning that at the present week, Target chief executive officer Brian Cornell stated that his company is discussing the next steps with vendors. In this case, actions are meant in the context of tightening the tariff policy of the United States.
Walmart said about two-thirds of its products are sourced in the United States after the retailer sought to diversify its supply chain. It is also worth noting separately that this company and its rival Amazon were cautious when presenting their earnings for the first quarter and outlooks, not hiding concerns about the potential impact of tariffs on consumer spending.
Neil Saunders, managing director of retail at research firm GlobalData, said during a conversation with media representatives last week that the uncertainty seems to have become a buzzword of earnings calls. In this context, it was noted separately that in the current year, many retailers are very concerned about various aspects of policy, particularly tariffs. The relevant companies, according to Neil Saunders, are fear of both the cost consequences for their business and the dampening impact of higher prices on spending. It was noted that this is seen in the guidance.
The results of special industry research indicate that currently in the United States, almost 80% of consumers expect that the new version of Washington’s tariff policy will cause prices to rise. Also, 75% of them fear that the mentioned US trade policy measures may provoke a shortage of goods. In the current situation, which continues to contain a significant amount of uncertainty about the future configuration of the state of affairs in trade, there is a high probability that consumers may pivot from spending to saving.
It is also worth noting that what can be called tariff processes are of concern not only to consumers. The results of industry research indicate that 80% of chief financial officers in the retail and goods segments hold the view that rising prices for supplies and a potential shortage of essentials would hurt their bottom lines.
A shortage of supply means an increase in prices for end consumers. It is worth noting that in this case, the prospect of a sharp growth of the indicator is relevant. The corresponding forecast is based on the elementary principles of the economic laws of supply and demand. At least 60% of chief financial officers noted increased economic uncertainty and planning challenges.
As we have reported earlier, Walmart Canada Plans to Build Dozens of Stores.
