Walmart price hike now seems inevitable as President Donald Trump imposes a higher tariff on China products.
The largest retailer of U.S. announced on Thursday (May 16) that it is raising its prices. This is despite being less reliant on China for its products compared to its competitors. A lot of its goods sold are made in the U.S. and South America.
Walmart price hike explained
Walmart CFO Brett Biggs said:
“increased tariffs will lead to increased prices, we believe, for our customers.”
He did not specify the items that will see a price rise. The chief, however, promised that the company will do everything it can to mitigate cost increases.
According to Biggs, Walmart will diversify products from various countries to ease consumer pain and will work with the costs structures of suppliers to manage higher tariffs.
Retailers in the U.S. depend largely on China for much of their goods sold locally. Latest statistics showed that the Asian country accounts for around 41% of all apparel sold in the U.S. in 2017, 72% of all footwear, and 84% of all travel goods.
Companies with higher exposure to China include those engaged in selling furniture, auto parts and sporting goods, according to analysts.
This might just be the beginning
After Walmart price hike, more retailers in the U.S. are expected to follow suit. Amongst which is Macy’s which also announced a possible price increase on some of its goods as trade war with China persists.
Macy’s CEO Jeff Gennette said:
“If the potential fourth tranche of tariffs is placed on all Chinese imports, that will have an impact on both our private and our national brands.”
Gennette added that the company may find it hard to avoid a price hike in the future.
Trump has recently raised tariffs on $200 billion worth of imported products from China to 25% to 10%.
Sources: CNBC, USA Today