Editorial | Walmart’s bid to force China to pay Trump tariffs is unacceptable
Chinese suppliers with already razor-thin margins should not have to bear the costs of Washington’s trade war
When tariffs are imposed, companies who heavily rely on imports have a few options in dealing with them, none of them particularly savoury.
They can pass the costs directly on to consumers in the form of price hikes, possibly reducing demand for their wares. They can absorb some or all of the tariff costs, hurting profit margins. They can also move supply chains to countries that are not subject to the tariffs, but that takes time. Or they can renegotiate with their suppliers in the target country to lower prices in order to blunt the effect of the tariffs at home.
Walmart, the world’s largest retailer, chose the last option. China, now locked in a full-fledged trade war with the United States, is rightly crying foul.
Officials from the Ministry of Commerce and other authorities summoned executives from the US giant to explain rumours it was demanding some of its Chinese suppliers significantly lower their prices.
The move would amount to a shift of the cost burden of the new 20 per cent tariffs imposed on Chinese goods by US President Donald Trump off of the American consumer, at the expense of China suppliers suffering from razor-thin margins.
Walmart says it is merely trying to help customers improve their lives and save money. “Our conversations with suppliers are all aimed at making our purpose a reality for millions of customers, and we will continue to work closely with them to find the best way forward during these uncertain times,” it said in a statement to the Post.
But the move placed Walmart under scrutiny in China, which said it could disrupt supply chains and harm firms and consumers in both countries, and possibly trigger punitive action.