Walmart Inc. has asked some Chinese suppliers for major price reductions, with the U.S. retail giant’s efforts to shift the burden of President Donald Trump’s tariffs facing strong push back from firms in the Asian nation, according to people familiar with the matter.
Some suppliers, including producers of kitchenware and clothing, have been asked to lower their prices by as much as 10% per round of tariffs, essentially shouldering the full cost of Trump’s duties, according to the people, who asked not to be identified as the information is private. Negotiations are held with individual manufacturers and the price cuts differ by firm, they said.
So far, few have acquiesced. Suppliers’ margins are already razor thin due to Walmart’s strategy of procuring goods cheaply in order to maintain its competitive advantage, according to the people.
For some, any reduction greater than 2% would see them make a loss, the people said. Others have had their own upstream vendors refuse requests to cut prices more than 3%, forcing manufacturers to consider purchasing some parts from Vietnam, according to one of the people. That move has raised concerns that the lower prices will come at the expense of product quality, the person said.
Walmart’s push shows how rising geopolitical tensions are set to reshape global supply chains and pile pressure on U.S. consumers already grappling with cost-of-living stresses. While Treasury Secretary Scott Bessent downplayed concerns about the tariffs, saying Chinese manufacturers will eat the extra cost, big box retailers Target Corp. and Best Buy Co. have warned shoppers should expect higher prices from the trade war that’s also ensnared Mexico and Canada.
Even before the latest salvo, Walmart Chief Executive Officer Doug McMillon had warned that some shoppers are buying smaller packs of goods as they run out of money before the end of the month.
A Walmart spokeswoman said the company will continue to work with suppliers to keep prices as low as possible for customers. The firm encourages all parties to work toward finding common ground that will protect shoppers from price hikes and continue to grow the US economy.
The retailer has historically had strong bargaining power over its Chinese suppliers and requests for lower prices have mostly been met, according to people familiar with the matter. But the scope of the recent requests are unusual and leaves manufacturers weighing whether to absorb the costs to maintain a longer-term business relationship.
Walmart initially requested price reductions from manufacturers when Trump’s first round of 10% tariffs on goods from China took effect in early February, with the request for additional cuts coming later the same month when the U.S. president threatened to double duties, said the people.
Other top American retailers may follow suit. In one of the first comments after the tariffs were enacted, Target Chief Executive Officer Brian Cornell said Tuesday his company is having discussions with vendors about the next steps.
Walmart has said about two-thirds of its products are sourced in the U.S. after the retailer sought to diversify its supply chain.
— With assistance from Jaewon Kang.