When tariffs are introduced, businesses that depend significantly on imported goods face several choices in handling these duties, but none of these alternatives are particularly appealing.
They may transfer the increased expenses directly to customers through higher prices, potentially decreasing demand for their products. Alternatively, they could shoulder part or all of the tariff charges themselves, which would cut into profit margins. Another option is shifting supply chains to nations exempt from these tariffs; however, this process requires considerable time. Lastly, they might attempt to negotiate reduced rates with suppliers within the targeted nation as a means to mitigate the impact of domestic tariffs.
Walmart, the world's largest retailer, chose the last option. China, now locked in a full-fledged trade war with the United States, is rightly crying foul.
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Representatives from the Ministry of Commerce and other government bodies called upon leaders of the American corporation to address speculations that it was pressuring certain Chinese suppliers to substantially decrease their pricing.
This change would mean transferring the financial impact of the new 20 percent duties levied on Chinese products by U.S. President Donald Trump away from American consumers onto Chinese suppliers who are already operating with very tight profit margins.
Walmart maintains that its objective is to assist customers in enhancing their lives and reducing expenses. The company stated in a message to the Post: “All our discussions with suppliers are geared toward turning this mission into a tangible experience for countless customers. We remain committed to collaborating closely with them as we seek out the most effective approach amid these unpredictable circumstances.”
However, this move put Walmart under examination in China, where they argued it might disturb supply chains and adversely affect businesses and consumers in both nations, potentially leading to retaliatory measures.
"If Walmart proceeds with this, anything that follows will not just involve discussions," cautioned China Central Television (CCTV) on its social media platform.
Although the initiative may seem justified from a business perspective, it appears decidedly unjust considering that the US initially introduced the tariffs unilaterally.
Walmart, which sources 60 percent of its products from China and operates over 330 stores in the nation, is caught in an uncomfortable position where it must effectively serve as an accomplice to U.S. tariff policies.
Even though the tariffs were imposed by Trump rather than China, Beijing also needs to proceed cautiously to avoid weakening its message of being open to foreign enterprises.
Tariff wars are characterized by an endless loop of counter-productive reciprocal actions, which inherently harm trade and prove burdensome for consumers.
Reports indicate that both China and the U.S. are exploring the possibility of holding a meeting between President Donald Trump and President Xi Jinping as early as next month.
The earlier the leaders come together to reach an agreement ending the trade war, the greater the benefit will be for companies and shoppers across the Pacific region.
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The article initially appeared on the South ChinaMorning Post (www.scmp.com), which is the premier source for news coverage of China andAsia.
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