Walmart Inc. has asked some important Chinese suppliersand the efforts of the American retail giant to move The load of the tariffs of President Donald Trump They face a strong rejection of the companies of the Asian nation, according to people familiar with the matter.
Some suppliers, including producers of kitchen and clothing, have been asked to reduce their prices up to 10% for each round of tariffswhich in essence forces them to assume the total cost of Trump’s tariffs, according to people, who asked not to be identified because the information is private. The negotiations are carried out with individual manufacturers and the price cuts differ according to the company, they said.
Until now, few have yielded. The margins of suppliers are already very narrow due to Walmart’s strategy to acquire products at a low price to maintain their competitive advantage, according to sources.
For some, any reduction greater than 2% would mean a loss, people said. Others have seen their own suppliers to reject pricing requests of more than 3%, which has forced manufacturers to consider the purchase of some parts of Vietnam, according to one of the people. This measure has raised concerns that the lowest prices occur at the expense of product quality, said the person.
“It is basically impossible,” said Lily Lu, supplier of fashion accessories for retailers such as Walmart, on maintaining the same quality and at the same time offer a 10%discount. “When you think it can’t be more crazy, it is.”
Walmart’s offensive shows how the growing geopolitical tensions are intended to reconfigure global supply chains and increase pressure on US consumers, who are already dealing with the tensions of the cost of living. While Treasury secretary, Scott Besent, minimized concerns about tariffs and said Chinese manufacturers will assume the additional cost, the large retail chains Target Corp. and Best Buy Co. warned that buyers should expect higher prices due to the commercial war that also affected Mexico and Canada.
Even before the last save, the executive director of Walmart, Doug McMillon, He had warned that some buyers are buying smaller packages from products because they run out of money before the end of the month.
A Walmart spokeswoman said the company will continue working with suppliers to keep prices as low as possible for customers. The company encourages all parties to work to find a common point that protects buyers from price increases and continues to drive the growth of the US economy.
According to people familiar with the matter, the retailer has always had a strong negotiation power with its Chinese suppliers and, for the most part, has fulfilled its lower price orders. But the scope of recent orders is unusual and leaves manufacturers to absorb costs to maintain a longer -term commercial relationship.
Walmart initially requested price reductions to manufacturers when the first 10% Trump tariffs about China’s products entered into force in early Februaryand the request for additional cuts came later that same month when the US president threatened to double tariffs, people said.
It is possible that other important American retailers follow the example. In one of the first comments after the entry into force of the tariffs, the executive director of Target, Brian Cornell, said on Tuesday that his company is having conversations with the suppliers about the next steps.
Walmart has said that approximately two thirds of its products come from the United States after the retailer seeks to diversify his supply chain.
