**Beijing**: China’s Ministry of Commerce is in talks with Walmart over allegations that the retail giant is unfairly pressuring suppliers to lower prices in light of new tariffs imposed by the Trump Administration, potentially jeopardising commercial contracts and supplier viability.
China’s Ministry of Commerce has recently engaged in discussions with executives from Walmart concerning allegations that the retail giant is exerting pressure on suppliers to reduce prices in response to a significant 20% tariff imposed by the Trump Administration. The meeting took place on March 11 and was prompted by claims from suppliers across various sectors, particularly kitchenware and clothing, that Walmart was requesting price reductions of 10% for each round of tariffs implemented.
According to officials from the Ministry of Commerce, Walmart’s demand to lower prices is deemed “unreasonable” and could potentially violate commercial contracts. They cautioned that if the retailer continues with its push for price reductions, China may take further actions beyond dialogue. Officials highlighted that Walmart’s insistence on significant price cuts without negotiation is considered unilateral.
In response to these allegations, Walmart provided a statement which did not directly address the claims of pressuring suppliers. Rachael Simmons, a corporate spokeswoman for Walmart, noted, “Walmart’s purpose is to help people save money and live better. 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.” She emphasised the company’s strong presence in China and the commitment of its associates worldwide to deliver to customers and members.
The backdrop to this controversy includes the initial 10% tariff imposed by the Trump Administration on February 4, followed by an additional 10% that came into effect on March 4. Chinese officials have expressed concerns that Walmart’s approach could pose risks to the supply chain and adversely affect the interests of businesses in both China and the United States.
Walmart’s business model relies heavily on partnering with suppliers globally to secure the best possible pricing, which allows for cost savings that are transferred to customers. However, suppliers in China are facing challenges as many already operate on “razor-thin” profit margins, leaving little room for further price reductions. Bloomberg reports that the pressures on these suppliers could strain their financial viability amidst the ongoing tariff situation.
The developments highlight the complexities of international trade relations and the significant impact of tariffs on the supply chain dynamics affecting both local and global markets.
Source: Noah Wire Services
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