Walmart To Raise Prices, Blames It on Trump Administration Tariffs
With the U.S.-China trade war ramping up, major American retailers are warning that price increases may be on the horizon.
The trade war was reinvigorated when the Trump administration once again implemented increased tariffs on $200 billion of Chinese-made goods.
The 15-percent increase in tariffs on Chinese-made imports — the first rise since last fall — came when progress toward a trade deal fizzled in negotiations earlier this month, and China reportedly backtracked on previous agreements.
U.S.-based retailers say that the effects of such a hike will likely come sooner rather than later.
One such retailer is Walmart, presently the largest and fastest-growing U.S. retailer. The company’s chief financial officer, Brett Biggs, told reporters Thursday that it will likely mean price hikes for American consumers.
“We’re going to continue to do everything we can to keep prices low. That’s who we are. However, increased tariffs will lead to increased prices, we believe, for our customers,” Biggs told CNN Business.
The company indicates that it should be shielded for a time from the impacts, a benefit of the sales diversity that comes from functioning in large part as a grocery store.
Still, UBS analyst Michael Lasser estimated in a report earlier this week that Walmart still receives as much as 26 percent of its goods from China, according to CNN.
And this pales in comparison to Target — which imports 34 percent of its goods from China — and major sporting goods and clothing stores that import almost exclusively from China.
Currently, tariffs primarily impact industrial materials and parts, but with the Trump administration looking into formally imposing tariffs on all other products not currently taxed, prices could be increased across the board on products American consumers directly purchase.
“That’s why we’re freaked,” Rick Helfenbein, president and CEO of the American Apparel & Footwear Association, said.
“This confirms our worst fears,” he said. “There are those of us who are optimists and thought it would go away and those who say it could come back at any time — and this points to the latter.”
Despite the fears of American CEOs, however, many economic and political analysts suggest that this trade war is starting to weigh China down, The New York Times Business reported on Friday.
Some suggest that increased debt and hesitance on the part of once-supportive business and political allies are reducing China’s sway over the U.S. at present.
Brad Setser, an economist at the Council on Foreign Relations and previous Treasury official during the Obama administration, told The Times that China’s unwelcoming import market has pushed businesses away, reducing opportunities for the nation to accumulate the leverage it needs.
“China has been so effective at squeezing manufactured imports out of its market that it has really limited its options to retaliate,” Setser said.
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