Walmart To Increase Prices In Light Of Recent Tariff Hike On Chinese Goods
During its latest earnings call for the first quarter of 2019, Walmart announced that it will be raising prices on some of its product as a direct result of Trump's tariff hike on Chinese goods.
The country's largest retailer mentioned that it has really been left with no other choice given that the tariff would eventually lead to higher costs for the company.
The retailer's chief financial officer, Brett Biggs, explained to reporters during the meeting that it was still dedicated to doing everything it can to keep prices low. However, the added tariff on the goods they will be importing would eventually translate to higher prices for its customers.
The company did not specify which of their products would become more expensive, but Briggs did mention that they are coming up with a number of strategies to mitigate the cost increase. The firm also stated that it will be working closely with its suppliers to manage price increases brought about by the tariff hikes.
Unlike other major retailers, Walmart only has a small portion of its products imported from China. According to reports, the company only imports 26 percent of its merchandise from Chinese suppliers. In comparison, Target imports 34 percent of its products from China.
Other retailers who specialize in products such as furniture, auto parts, and sporting goods have much more exposure to the tariff hikes.
More than half of Walmart's revenue comes from groceries, most of which are supplied domestically. Some of its grocery items also come from other more trade-friendly regions such as South America.
Despite the possible economic impact and stern warnings from China, Trump pushed ahead with his threats of a tariff hike for more than $200 billion worth of Chinese goods.
The products hit with the tariff were mostly component parts and industrial materials. However, some products such as apparel, luggage, and other consumer products were also hit. Trump's administration is also reportedly preparing to expand the increased tax to other types of Chinese goods, including toys, shoes, and other products not already taxed.
Major retailers and manufacturers in the United States rely heavily on Chinese imports for their various products. In fact, more than 41 percent of all the apparel in the United States comes from China. 72 percent of all shoes and 84 percent of all travel goods also comes from China.
Aside from Walmart, other retailers have also announced to customers that they may be increasing their prices following the tariff hikes. Macy's, another popular American retailer, has already mentioned that it will be raising prices in light of the increased taxes.