Walmart meets Chinese officials on supplier pricing

Chinese officials summoned Walmart executives on Tuesday, expressing concerns over reports that the retailer urged suppliers for discounts to absorb higher US tariffs.

President Trump has added a 20% duty on Chinese imports on top of the existing ones, which has put US retailers in a tough spot.

As tariffs would leave Walmart vulnerable, the retailer pressured suppliers to cut prices on some products by ~10%.

Chinese officials warned that Walmart’s demand could disrupt supply chains, harm businesses, and impact American consumers, according to Yuyuantantian, a Weibo account linked to China Central Television. Bloomberg reported that Walmart targeted kitchenware and clothing manufacturers for price reductions.

Chinese officials urged businesses in both countries to cooperate in addressing tariff increases. 

However, Walmart faces a dilemma: Raising prices could alienate both Trump and American consumers while shifting the burden to suppliers isn’t easy. The retailer, known for its low-cost strategy, sources many products from China to remain competitive.

China, already dealing with weak domestic demand and overproduction, sees this as an unfair business practice.

Due to tariffs, US companies have been reducing reliance on China, with many, including Walmart, asking suppliers to shift production to Southeast Asia. 

However, negotiations are complex since suppliers already operate on slim margins.

Despite the challenges, Walmart executives say they can manage tariffs while keeping prices low. China accounts for a small but growing share of the retailer’s revenue, with $5 billion in sales last quarter, up 28% from the previous year.

If tensions continue, businesses and consumers in both countries may face rising costs and supply chain disruptions.