China’s Ministry of Commerce engaged in discussions with Walmart (WMT, Financials) regarding the company’s reported request for price reductions from Chinese suppliers in response to new U.S. tariffs, multiple media outlets reported.
Reports from Chinese state media indicate that Walmart reportedly pushed producers of kitchenware and apparel as well as other suppliers to cut prices by up to 10% every round of tariffs imposed by the United States. The demand comes as companies respond to the most recent round of trade policies, which included a 10% duty on Chinese imports starting Feb. 4, then an extra 10% tariff on March 4.Chinese official media attacked Walmart’s strategy, contending that it is illogical to place all tariff-related expenses on suppliers and might compromise fair trade. The studies cautioned that such policies would cause supply chains to become unstable and harm companies in China and the United States, hence maybe influencing consumer pricing.Many Chinese vendors already have low profit margins, hence Walmart’s price pressure might aggravate their financial situation even more. The Chinese government has asked American companies to use a cooperative strategy instead of transferring costs down the supply chain to help to offset the impact of tariffs.As businesses negotiate regulatory changes impacting world trade, the conversations between China’s Ministry of Commerce and Walmart underscore more general trade issues.
This article first appeared on GuruFocus.
