Walmart asks Chinese suppliers for major price cuts amid Trump tariffs

NEW YORK – Walmart has asked some Chinese suppliers for major price cuts, with the US retail giant’s efforts to shift the burden of President Donald Trump’s tariffs facing strong pushback from Chinese firms, according to people familiar with the matter. 

Other top American retailers may follow suit. In one of the first comments

after the tariffs were enacted,

Target chief executive Brian Cornell said on March 4 it is having discussions with vendors about the next steps.

As for Walmart, some suppliers, including producers of kitchenware and clothing, have been asked to lower prices by as much as 10 per cent per round of tariffs, essentially shouldering the full cost of Mr Trump’s duties, according to the people. Negotiations are held with individual manufacturers and the price cuts differ by firm, they added.

So far, few have acquiesced. Suppliers’ margins are already razor-thin due to Walmart’s strategy of procuring goods cheaply in order to maintain its competitive advantage, according to the people. 

For some, any reduction greater than 2 per cent would see them make a loss, the people said. Others have had their own upstream vendors refuse requests to cut prices by more than 3 per cent, forcing manufacturers to consider purchasing some parts from Vietnam, according to one of the people.

That move has raised concerns that the lower prices will come at the expense of product quality, the person said.

“It’s basically undoable,” Ms Lily Lu, a fashion accessories supplier to retailers including Walmart, said about maintaining the same quality while extending a 10 per cent discount. “When you think it can’t get any crazier, it does.”

Walmart’s push shows how rising geopolitical tensions are set to reshape global supply chains and pile pressure on US consumers already grappling with cost-of-living stresses.

While US Treasury Secretary Scott Bessent downplayed concerns about the tariffs, saying Chinese manufacturers will absorb the extra cost, big box retailers Target and Best Buy have warned that shoppers should expect higher prices from the trade war that has also ensnared Mexico and Canada.

Even before the latest salvo, Walmart chief executive officer Doug McMillon warned that some shoppers are buying smaller packs of goods as they run out of money before the end of the month.

A Walmart spokeswoman said the company will continue to work with suppliers to keep prices as low as possible. The firm encourages all parties to work towards finding common ground that will protect shoppers from price hikes and continue to grow the US economy.

The retailer has historically had strong bargaining power over its Chinese suppliers and requests for lower prices have mostly been met, according to people familiar with the matter. But the scope of the recent requests is unusual and leaves manufacturers weighing whether to absorb the costs to maintain a longer-term relationship. Walmart has said about two-thirds of its products are sourced in the US after it sought to diversify its supply chain. BLOOMBERG