Chinese authorities summoned Walmart Inc. executives on Tuesday over reports it asked suppliers to bear rising costs incurred by increased US tariffs.
Several Chinese authorities, including the Ministry of Commerce, have met with the US retailer to learn about its negotiations over price cuts with suppliers in China, according to a post by Yuyuantantian, a Weibo account affiliated with state-run China Central Television that regularly signals Beijing’s thinking about trade.
The post said such demands risk fracturing the global supply chain and hurting the interests of both US and Chinese companies and of American consumers. It also hinted that Walmart could expect more actions from Beijing if it continues to do so.
Walmart didn’t immediately respond to Bloomberg’s request for comment.
The move marks Beijing’s efforts to show strength as President Donald Trump targets China with consecutive rounds of trade tariffs. Bloomberg reported last week that Walmart asked some suppliers for major price reductions as a way to insulate American consumers from higher levies on Chinese goods.
Beijing hit back at Trump’s additional 10 percent tariff last week with levies of up to 15 percent on US agricultural imports. Authorities have also targeted US businesses operating in the country, for example by banning the import of Illumina Inc. gene-sequencing machines into China, effectively stemming its growth in the market.
The stakes are high for Walmart. Unlike many global retail brands that have lost their historical dominance in China to local competition, Walmart has defied the country’s consumption slump with robust growth for its membership store Sam’s Club through the sale of premium cuts of meat and other high quality foods increasingly favored by China’s middle class.
Walmart notched net sales growth of 28 percent in China in the most recent quarter. It added six more Sam’s Club stores in the past year, bringing its total number of outlets to 53 across more than 20 Chinese cities.
The CCTV-affiliated post said Walmart sourced around 60 percent of products from China and warned that being condescending to Chinese suppliers could prompt local consumers to seek out alternatives.
“Chinese consumers know how to look for the suppliers that make Walmart’s products and purchase directly from them,” the post said.
Any demands on suppliers, if true, would be bad for Walmart’s operations and developments in China, the post said.
In the wake of the post, China’s Chamber of Commerce for Import & Export of Textiles said its had received complaints about Walmart’s demands for price cuts and, if verified, pledged to take measures to protect its members’ interests.
The industry body urged companies in both countries to resolve trade frictions in friendly, equal and mutually beneficial ways, rather than unilaterally leveraging market dominance to disrupt supply chains.
Chinese exporters are resisting any moves to cut their prices further as they already have razor-thin margins due to Walmart’s strategy of sourcing goods at a low price to stay competitive. Its demands on suppliers show how rising geopolitical tensions are set to reshape global supply chains and pile additional pressure on US consumers already facing inflation.
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.
By Bloomberg News
Learn more:
Walmart Asks Chinese Suppliers for Major Price Cuts on Trump Tariffs
Some suppliers, including clothing producers, have been asked to lower prices by as much as 10 percent per round of tariffs, essentially shouldering the full cost of duties.
