Walmart, Passes up to 66% Tariff to Chinese Firms…Supply Chain Conflict Rekindles Amid Political Pressure

Reports have emerged that major U.S. retailers, including Walmart, are passing the burden of high tariffs imposed on Chinese products back to suppliers. On the 31st, South China Morning Post (SCMP) quoted multiple industry sources to report that Walmart is overturning existing agreements and demanding Chinese companies bear up to 66% of the tariff burden.

As the U.S.-China trade war intensifies again, U.S. politicians are increasing pressure on retailers to absorb the tariff burden within the supply chain instead of passing it on to domestic consumers. Accordingly, Walmart and others have been engaging in weeks of negotiations with suppliers in China and Southeast Asia over tariff sharing.

An executive from a Chinese clothing supplier stated, "Most of our industry is being asked to bear more than half of the tariffs, at most up to 66%." However, the final agreement on the tariff-sharing ratio has yet to be finalized, and some conditions are still under negotiation.

This measure also relates to the background of once halted attempts to pass on tariffs. Previously, some U.S. retailers had suspended orders for Chinese products amid warnings from Chinese state media and concerns over supply disruptions, but resumed orders at the end of last month, intensifying discussions on tariff sharing.

Meanwhile, the U.S. and China have agreed to temporarily lower tariff rates in mid-month. Consequently, the U.S. reduced tariffs on Chinese products from 145% to 30%, and China lowered tariffs on U.S. products from 125% to 10%. However, this truce is temporary for 90 days, and if the agreement collapses, tariffs will return to triple digits. Currently, negotiations between the two countries are at a standstill.

Some Chinese suppliers express concerns that they will have to bear losses if this situation becomes prolonged. There are also criticisms that political calculations to reduce the burden on U.S. consumers are causing instability in the global supply chain.