Shoppers will pay the price as U.S.-China trade war escalates, says Walmart

May 17 , 2019

Leading U.S. retailer Walmart has cautioned that prices for shoppers will rise due to higher tariffs on goods from China, according to Reuters.

U.S. President Donald Trump’s increased tariffs on US$200 billion worth of Chinese imports to 25% from 10% last week is widely expected to raise prices on thousands of products, including clothing, furniture and electronics.

China retaliated with its own tariff spike on U.S. products on Monday, though on a smaller scale.

Walmart U.S. CEO Greg Foran was quoted as saying the company will maintain its “low-price leadership” and “manage costs on an item-by-item basis.” But that position has been threatened, in part, by rising competition from discount chains like Aldi.

Meanwhile, Moody’s analyst Charlie O’Shea said the potential impact on Walmart and its shoppers from tariffs is limited by its food business – its grocery operation, which includes fresh food, contributes roughly 56% to overall revenue.

According to Retuers, Walmart’s vendors have already started to raise prices, among them Del Monte Foods, which supplies fresh and packaged goods to the retail, including mandarin oranges imported from China.

“It’s not just tariffs. Transportation costs are up, labor costs are up. It’s an inflationary environment,” Del Monte CEO Greg Longstreet told Reuters on the sidelines of a conference.

“A lot of that’s going to have to be passed on. The consumer is going to have to pay more for a lot of critical goods.”

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