Chinese authorities summoned Walmart executives earlier this week over reports of the company asking its suppliers in the country to slash their prices to help the world’s largest retailer counteract the impact of President Donald Trump’s sweeping tariffs on Chinese imports.
A consumer walks out of a Walmart supermarket in Beijing, China.
According to Chinese state media outlet CCTV, the Chinese Ministry of Commerce and “other relevant departments” summoned the retailer over U.S. media reports about Walmart asking its suppliers to slash prices as much as 10% per new tariff round.
A spokesperson from the commerce ministry told the state-run outlet that it had taken note of media reports and sought responses from companies before asking Walmart about the situation.
The state media outlet blasted Walmart, saying the retailer was attempting to “shift the burden” of Trump’s new tariffs on China to “Chinese suppliers and consumers.”
The report claimed the cost of the tariffs during Trump’s first term was “mainly borne” by American consumers and now Walmart was trying to change that by asking Chinese suppliers to “do business at a loss.”
In a statement Wednesday, China’s top textiles trade group urged major U.S retailers to “address international trade issues fairly and reasonably” and said it plans to take “proactive measures to safeguard the legitimate rights and interests of its members.”
In a statement Wednesday, China’s top textiles trade group urged major U.S retailers to “address international trade issues fairly and reasonably” and said it plans to take “proactive measures to safeguard the legitimate rights and interests of its members.”
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In a statement shared with the state-controlled China Daily, Walmart China said it would “continue to maintain close cooperation with suppliers and spare no effort to optimize prices for our customers,” while urging “all parties to actively seek common ground and work together.”
The response by Chinese authorities appears to have been triggered by a Bloomberg report from earlier this month, which said Walmart was asking some of its Chinese suppliers for “major price reductions.” The report said Walmart’s effort was met with “strong pushback” as it was asking some companies supplying products like kitchenware and clothing to lower their prices “as much as 10% per round of tariffs,” effectively asking them to eat the entire cost of the tariffs. The push for price cuts reportedly was different from supplier to supplier, but the report said “few” had agreed. An analyst cited by China Daily said most of Walmart’s Chinese suppliers operate on “very thin margins.” The Bloomberg report said that for some suppliers, a price cut higher than 2% would see them face a loss and many were facing pushback from suppliers further down the chain to cut prices.
During the company’s most recent quarterly earnings call, Walmart CEO Doug McMillon expressed confidence about the company’s ability to weather tariffs. “As we've been saying, tariffs are something we've managed for many years, and we'll just continue to manage that…we're wired to try and save people money. So that will be our ultimate goal.” The retailer’s CFO John Rainey said it did not have any “explicit assumption” in its guidance around tariffs, but “We feel like we'll be able to navigate that. Will it turn out differently than maybe what we expect today? Perhaps, and we feel good about our ability to do that though.”
Walmart Asks Chinese Suppliers for Major Price Cuts on Trump Tariffs (Bloomberg)
Walmart Gets an Earful From China Over Response to Trump Tariffs (Wall Street Journal)