Trump's China Tariffs Will Force Price Hikes, Walmart Warns

Announced by the Trump administration Monday, the decision to impose new tariffs on China is threatening to further escalate the trade war President Trump has been waging with the Asian country, according to CNBC.

President Donald Trump will slap 10 percent tariffs on $200 billion in Chinese goods, which will go up to 25 percent at the end of the year.

As the Inquisitr reported Tuesday, following China's promise of retaliatory measures, Trump accused China of meddling in U.S. elections and threatened economic retaliation. These developments have already affected the world market, and U.S. companies are starting to express disdain as well.

In a letter to U.S. Trade Representative Robert Lighthizer, Walmart warned that Trump's tariffs on Chinese goods will force price hikes, hurt customers, and the American economy, CNN Money reports.

"The immediate impact will be to raise prices on consumers and tax American business and manufacturers," Walmart said, "either consumers will pay more, suppliers will receive less, retail margins will be lower, or consumers will buy fewer products or forego purchases altogether."

Walmart controls 10 percent of the American retail market, with its customer base being predominantly low and middle-income Americans. As CNN observed, Walmart - much like other retailers - will have to choose between taking a hit to its profit margins by absorbing the cost of tariffs or increasing prices for customers.

For Walmart, addressing the dilemma may be imperative, being that of its $500 billion in sales last year, about $50 billion was linked to China: investments in Chinese businesses or Chinese imports.

Illustrating the dilemma it's facing to U.S. Trade Representative Robert Lighthizer, Walmart explained that their mass market bicycles require 40 individual parts to make, all of which are imported. Tariffs on bicycle parts will, Walmart warned, make U.S. businesses uncompetitive and drive up the price of bicycles.

The Trump administration's plan to push U.S. manufacturers to produce more goods in the United States has disrupted the global supply chain, and American companies are simply unable to meet demand. Furthermore, according to Walmart, even with 25 percent tariffs, buying bikes with Chinese parts will still be cheaper than shifting production to the U.S.
"The [administration] continues to overestimate the ability of US companies to shift supply chains out of China. Global supply chains are extremely complex. It can take years to find the right partners who can meet the proper criteria and produce products at the scale and cost that is needed."
By criticizing President Trump's tariffs on Chinese goods, Walmart joined hundreds of other American businesses that recently testified in hearings hosted by the Office of the U.S. Trade Representative. As Axios reported, industry representatives and businesses argued that Trump's tariffs would not only fail to curb China's unfair trade practices but also hurt the American consumer.