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Walmart is in hot water for trying to pass the cost of U.S. tariffs onto its Chinese suppliers – but it’s far from alone.
At a meeting in Beijing, Chinese officials criticized Walmart’s (WMT) approach, arguing that shifting the burden of U.S. tariffs onto Chinese suppliers is both irresponsible and unfair, according to the Wall Street Journal (NWSA), which cites sources present at the meeting. Walmart did not immediately respond to Quartz’s request for comment.
The retail giant’s situation is particularly sensitive due to its extensive operations in China, with over 330 locations in the country, making it more vulnerable to potential retaliation from the Chinese government.
Walmart’s efforts to offload these costs are being driven by the impact tariffs are having on U.S. retailers. The Trump administration’s decision to add a 20% tax on Chinese imports – on top of existing tariffs – has increased pressure on companies like Walmart. Clothing retailer PacSun, for example, is also exploring ways to mitigate costs.
However, this approach has proven difficult. Many suppliers have resisted, resisting price cuts and calling for changes in production. Some have even been urged to move production outside of China, with countries like Vietnam seen as potential alternatives.
Walmart has reportedly demanded price cuts of up to 10% from Chinese manufacturers, particularly in sectors like kitchenware and apparel. But many suppliers have said these cuts would threaten their profits, making the requests hard to meet.
Despite the backlash, Walmart maintains it will work with its suppliers to avoid negative consequences, emphasizing that China remains a key market for its global success.
CEO Doug McMillon has stated that the strain of sky-high food prices had caused “frustration and pain” for U.S. consumers, especially those on the lower end of the income scale. McMillon also hinted during the company’s earnings call in February that the tariffs could force the retailer to pass those costs onto consumers.
Similarly, competitors like Target and Best Buy have indicated they will raise prices to offset the costs of tariffs, making it clear that the retail sector faces a challenge in absorbing tariffs.