As a global retail giant, Walmart has long pursued a low-price procurement strategy, relying on its strong market position to pressure suppliers to obtain the lowest purchase price, so as to maintain price competitiveness in the consumer side.
However, the Trump administration recently imposed tariffs on Chinese goods, resulting in a sharp rise in Walmart's import costs. To ease this cost pressure, Walmart has tried to pass on the cost of the new tariffs to its Chinese suppliers, asking some of them to cut prices by as much as 10% in each round of tariff adjustments.
For American consumers, behind Walmart's move is the serious inflation problem in the United States. The move comes at a time when rising geopolitical tensions are reshaping global supply chains and putting enormous pressure on US consumers, who are already suffering from rising living costs.
While U.S. Treasury Secretary Scott Bessant has downplayed the impact of the tariffs, claiming that Chinese manufacturers will bear additional costs, other retailers, including Target Inc and Best Buy Co, have explicitly warned consumers that the trade war could lead to higher prices for goods.
In fact, Walmart CEO Doug McMillan has previously warned that some consumers may be unable to afford smaller packages at the end of the month.
A Walmart spokesperson said the company will continue to work with suppliers to keep prices as low as possible to benefit customers, and encourages all parties to work together to find solutions that will protect consumers from price increases and drive U.S. economic growth.
Chinese suppliers: Caught between the cracks
Chinese suppliers are under more pressure than ever. Many suppliers say their profit margins are already thin, especially for commodity manufacturers, where margins are typically around 5 per cent. If Walmart demands a 10% price cut, it will undoubtedly fall into the dilemma of operating at a loss. In addition, some suppliers' upstream suppliers refuse to reduce prices by more than 3%, which further limits the possibility of price cuts.
Textile foreign trade industry: the severe situation of the hard-hit areas
The textile foreign trade industry has become one of the most affected areas. In recent years, the continuous rise of raw material costs, labor costs and the increasingly stringent environmental requirements have extremely compressed the profit margins of textile enterprises. If further price cuts are made, companies may not be able to maintain normal operations and may even be forced to reduce the quality of their products.
Suppliers: Exploring coping strategies
In the face of Walmart's demand for lower prices, some suppliers began to think about adjusting their production strategies. For example, some companies plan to source parts from other countries such as Vietnam to reduce costs. However, this adjustment may cause new problems, such as supply chain disruptions and product quality degradation.
The incident of Walmart asking Chinese suppliers to slash prices fully reflects the huge impact of trade friction on the global supply chain. Chinese suppliers in the current situation of thin margins, it is difficult to withstand further price reduction pressure. The incident also highlights the profound impact of trade policy uncertainty on businesses and industries in the context of globalization. At a time when global supply chains are deeply intertwined, any unilateral cost transfer behavior may trigger a chain reaction, ultimately affecting the stability and sustainable development of the entire industrial chain.
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