Walmart is asking its Chinese suppliers to lower their prices significantly as it braces for the impact of President Trump’s new tariffs. Reports indicate that the retail giant has requested price cuts of up to 20% from some suppliers, particularly those dealing in kitchenware and clothing. However, many suppliers are resisting these demands, as such cuts would make it difficult for them to maintain their operations under the strain of the tariffs.
The discussions between Walmart and its suppliers have varied, with different manufacturers facing different requests. Many of these suppliers already operate on very tight margins, and reducing prices beyond a small percentage could lead to losses for them. Some suppliers have reported that they are unable to agree to cuts greater than 3%. As a result, some manufacturers are considering shifting their production to countries like Vietnam to find cheaper alternatives.
Walmart’s spokesperson stated that the company is committed to working with suppliers to keep prices low for customers. They emphasized the importance of collaboration among all parties to avoid price increases that could hurt consumers and the economy. However, the company did not comment specifically on the reports of price cut requests.
The pressure on retailers like Walmart comes as Trump has imposed stiff tariffs: a 25% tax on goods from Canada and Mexico, along with a 20% tariff on imports from China. These tariffs are part of the administration’s broader trade strategy, which aims to reshape international trade relationships. During a recent address, Trump urged Americans to be patient as the country adjusts to these changes.
In the past, Walmart has had considerable leverage over its suppliers, often successfully negotiating lower prices. However, the current situation is more challenging. The retailer’s latest requests are seen as unusually aggressive, leaving suppliers to weigh the benefits of continuing to work with Walmart against the financial risks posed by the tariffs.
Walmart has been actively trying to reduce its reliance on Chinese imports, which dropped from 80% in 2018 to 60% in 2023. This shift reflects a broader trend among retailers to diversify their supply chains. In fact, two-thirds of Walmart’s total product spending now goes toward items made or grown in the United States.
As retailers adjust to the new tariff landscape, they are exploring various strategies to mitigate the financial impact. Target’s CEO recently noted that discussions with vendors about handling tariff-related price increases are ongoing, indicating that Walmart may not be alone in facing these tough negotiations.