Walmart Reportedly Seeks Lower Prices From China Amid Tariff Pressure
Walmart reportedly wants Chinese suppliers to cut prices in the face of tariff-related pressures.
However, the world’s largest retailer has thus far found few takers for this request, Bloomberg reported Thursday (March 6), citing unnamed sources.
Some suppliers, such as kitchenware and apparel providers, have been asked to reduce their prices by up 10% for each round of tariffs on Chinese imports, which would mean taking on nearly the full cost of the new levies, per the report.
The trouble is that suppliers are already facing thin margins, as Walmart employs a strategy of procuring products cheaply to keep its competitive edge, according to the report.
Slashing prices more than 2% would mean a loss for some suppliers, while others are dealing with upstream vendors who refuse to make their own cuts, the report said. This would force manufacturers to consider buying supplies from Vietnam, and it raises concerns that lower prices would mean inferior products.
Walmart and rival Amazon were cautious when presenting their first-quarter earnings and outlooks, in part due to concerns about how the tariffs might impact consumer spending.
“Uncertainty seems to be the buzzword of earnings calls,” Neil Saunders, managing director of retail at research firm GlobalData, told PYMNTS in an interview last week. “Going into this year, a lot of retailers are very nervous about various aspects of policy, particularly tariffs. They fear both the cost implications for their businesses and the dampening impact higher prices would have on spending. We are seeing this come out in guidance.”
PYMNTS Intelligence found that 78% of consumers expect tariffs to drive prices higher, and 75% worry about product shortages. The uncertainty about tariffs — with Washington exempting some items and Mexico waiting to announce its response — could cause consumers to pivot from spending to saving.
It’s not just consumers who are worried. PYMNTS Intelligence found that 80% of chief financial officers in the retail and goods segments said higher costs for supplies and potential shortages of essentials would hurt their bottom lines.
“Short supply means that prices would rise even more sharply for end consumers under the simple laws of supply and demand,” PYMNTS wrote this week. “In general, the majority of CFOs surveyed — at least 60% — see greater economic uncertainty and planning challenges.”
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