Walmart () has asked some Chinese suppliers significant price reductions, while US retail giant efforts to transfer President Donald Trump’s charges face strong resistance from companies in the Asian nation, according to sources familiar with the issue.
Some suppliers, including cooking and clothing utensil producers, were asked to reduce their prices by up to 10% per round of tariffs, essentially bearing the total cost of Trump measurements, according to sources, which asked not to be identified as the information is confidential. Negotiations are made with individual manufacturers and price cuts range from company to company, they said.
So far, few have agreed. Supplier margins are already extremely reduced due to Walmart’s strategy to purchase low prices to maintain its advantage competitive, according to sources.
For some, any reduction greater than 2% would result in loss, people said. Others had their own suppliers refusing to fulfill requests for price cuts of over 3%, forcing manufacturers to consider the purchase of some Vietnam pieces, according to one of the sources. This measure has raised concerns that lower prices will come at the expense of product quality, said the person.
Walmart’s pressure shows how growing geopolitical tensions are about to reshape global supply chains and increase pressure on US consumers, which already face cost of living stress. While Treasury Secretary Scott Bessent, stating that Chinese manufacturers will bear extra cost, large retailers such as Target (TGT) and Best Buy (BBI) warned that consumers should expect higher prices due to trade war that also involved Mexico and Canada.
Even before the last attack, Walmart CEO Doug McMillon had warned that some consumers are buying smaller product packages as they run out of money before the end of the month.
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A Walmart spokeswoman said the company will continue to work with suppliers to keep prices as low as possible for customers. The company encourages all parties to work to find common ground that protect consumers from price increases and continue to grow the US economy.
Historically, the retailer had a strong negotiation power over her Chinese suppliers and lower price requests were mostly met, according to people familiar with the matter. But the reach of recent orders is uncommon and leaves manufacturers to evaluate if they should absorb costs to maintain a long -term business relationship.
Walmart initially requested manufacturer price reductions when the first round of 10% tariffs on China products came into force in early February, with the request for additional cuts later in the same month, when the US president threatened to double the rights, sources said.
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Other major American retailers may follow the example. In one of the first comments after tariff implementation, Target CEO Brian Cornell said on Tuesday that his company is arguing with suppliers about the next steps.
Walmart said that about two thirds of its products are purchased in the US after the retailer seeks to diversify its supply chain.
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