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Walmart Faces Pressure from China Over Tariff-Related Price Cuts
Chinese officials met with Walmart executives this week, following reports that the retail giant had been pressuring its Chinese suppliers to absorb the cost increases resulting from recent US tariffs. The meeting, first reported by Chinese state media, highlights the growing tension between US businesses and the Chinese government as the trade war continues.
Walmart, known for its low prices, is reportedly asking suppliers to lower their prices to offset the tariffs imposed by the Trump administration. However, this strategy has not been well-received by Beijing.
Chinese officials are resistant to the idea of their domestic suppliers bearing the financial burden of US trade policy. One expert, Keith Hartley, CEO of supply-chain software startup LevaData, noted that Chinese suppliers and the government are unlikely to accept the tariffs without resistance.
This trade dispute comes at a delicate time for US-China relations. Last month, President Trump announced a 20% tariff on Chinese imports, followed by a 25% tariff on steel and aluminum imports from China. While the political relationship between the two countries remains strained, Walmart’s business in China continues to thrive.
Walmart’s strategy, according to analysts, relies on leveraging its position as America’s largest retailer to negotiate lower prices from suppliers. This bargaining power, stemming from Walmart’s sheer scale, could help mitigate the increased costs. However, even with its considerable influence, Walmart may struggle to completely shield consumers from price hikes.
The situation is further complicated by the fact that a significant portion of Walmart’s suppliers are based in China. According to reports, the company has asked suppliers to cut prices by as much as 10% per round of tariffs.
This demand has placed many suppliers in a difficult position, as profit margins are already thin. Some suppliers suggest that even a 2% price cut could force them to sell at a loss.
In a statement, Walmart affirmed its commitment to helping consumers save money and pledged to work with suppliers to navigate these “uncertain times.” CEO Doug McMillon has previously expressed confidence in Walmart’s ability to manage tariffs, citing the company’s experience in dealing with such challenges.
Analysts suggest Walmart’s strategy may be to prioritize minimizing price increases for consumers, even if it means accepting a smaller profit margin. This approach could benefit the company in the long run by attracting price-conscious shoppers.
However, the success of this strategy depends heavily on the cooperation of its suppliers, and the intervention of the Chinese government introduces a significant element of uncertainty. While Walmart’s stock has performed well recently, the company has lowered its 2025 outlook due to macroeconomic factors, including the ongoing trade war.
The ultimate impact of the tariffs on Walmart and its customers remains to be seen.
Update: This article has been updated to include a statement from Walmart.