Chinese authorities summoned Walmart executives this week over reports it asked suppliers to bear rising costs incurred by increased U.S. tariffs. Bloomberg's Emily Cohn discussed what's at stake on Bloomberg Open Interest.

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Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

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Chinese authorities have met with Walmart executives following reports that the retail giant has requested some of its Chinese suppliers to lower prices to offset the expenses from increased U.S. tariffs. Walmart sources about 60 percent of its products from China, and this high level of exposure means that any changes in tariff-related costs could significantly affect its operations.

Walmart has a longstanding practice of negotiating lower prices with suppliers to maintain competitive pricing. This strategy, alongside its sizable operations, is a fundamental part of how the corporation manages to offer low prices. However, the recent demand made to Chinese suppliers reflects the broader conflict between tariff impacts and supplier capabilities, with some suppliers indicating they cannot absorb the incremental costs without operating at a loss.

The stakes are considerable as the tariffs imposed by the U.S. have already been put into effect in China. This situation has prompted executives from Walmart and other companies to suggest that an increase in consumer prices may be unavoidable. Suppliers, facing thin margins, have stated that price reductions beyond a modest percentage are unsustainable, which could potentially influence retail prices at Walmart.



China officials meet with Walmart after tariff price cut demand

Walmart obviously gets a lot of what it sells from China. So we reported last week that Walmart has asked some of its Chinese suppliers to reduce prices to offset the cost of the tariffs. The thing to keep in mind here is that this is what Walmart does all the time with all of its suppliers all over the world. This is in their DNA. This is how Walmart keeps its prices low and competitive. And this strategy combined combined with their size is the reason why we think of Walmart as a place to find the lowest prices. It's what makes Walmart Walmart. So in a way this is what Walmart does. But it also it is. It encapsulates this contradiction that we see playing out in the real world right now. We have the White House saying that Chinese suppliers will eat the costs of of the tariffs. But then we have in these reports now these suppliers saying we really can eat these costs. Our margins are already so thin and we just can't do it. Yeah. So a good concrete example of that debate playing out. And as you mentioned I mean this is what Walmart does. Really helpful context there. But just talk us through how high the stakes are. I'm taking a look at our reporting that Walmart sources about 60 percent of its products from China. That exposure is pretty high. Yeah. And I think that's why we see a lot of CEOs now coming out and saying like if if if these tariffs come into effect which in China they already have we are going to have to raise prices. I think there are suppliers in that story that say we can't go anything more than 2 or 3 percent because those are our margins. And at that point we would just be losing money.

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