The US has raised tariffs on imported goods from China and Walmart, considered to be the world’s largest retailer, is sending out warnings that it may cost the consumer in higher prices at the register. Walmart’s cautionary response to the raise in tariffs follows those that were made by Macy’s CEO, Jeffrey Gennette, this week.
Walmart’s CFO and Executive Vice-President, Brett Biggs, shared with Wall Street analysts that the company has for months had strategies in place to abate the rise in tariffs on Chinese imported goods should it really happen. Other retailers also have plans in place, but Macy’s faces difficulties in that they had not planned for the tariff increases when they decided their yearly earnings figures for the year..
The Trump administration last week put into effect a 25 percent hike in tariffs which is up from 10 percent against $200 billion of Chinese imports. China is retaliating with their own increase of tariffs on US goods imported into China.
Biggs, shared Walmart’s hopes for a trade deal soon as the company prides itself in having the lowest prices for their customers and in consideration of their shareholders as well. The US and China are scheduled for trade deal negotiations in June at the G20 summit in Japan this June.
Macy’s Gennette said to analysts this week that this fourth issuance of tariff increase will definitely impact pricing on not only their private brands but also their national brands as well. He also said that the tariffs had already affected pricing on furniture but with this new increase clothing and accessories will be affected next.
The tariff increase on Chinese goods generally will affect home goods, shoes, clothing accessories, even shampoo and bicycles to food.
US retail spending is already taking a dip for 2019 in sales as consumers are tightening their budget belts and analysts predict sales numbers will continue to slow not only due to the increase in tariffs but also to the increasing national debt, and the general feeling of uncertainty regarding the overall economy nationally and worldwide.
The National Retail Federation(NRF) said that companies can do other things besides passing the increased costs in tariffs onto to customers. Companies could absorb the cost for the time being until trade agreements between the US and China are reached, or they could lower wages, cut back on number of workers or hold back on making investments.
The NRF says that small business will be vulnerable during the tariff increase on Chinese goods, because they don’t have the ability to switch suppliers quickly or the resources to back them up.