Walmart is getting caught in the middle of an escalating trade war between the United States and China.
Chinese officials summoned executives from the US retail giant on Tuesday to investigate whether it had pressured its suppliers in China for discounts to cope with rising tariffs imposed by Donald Trump, according to a state media report.
Trump doubled tariffs on all Chinese imports to 20% as of last week. In response, China has announced a fresh round of retaliatory tariffs, covering US agriculture imports, which took effect Monday.
Many businesses are struggling under Trump’s chaotic tariff announcements, which have escalated trade tensions between the world’s two largest economies. Retailers have told CNN that they may have to raise prices at a time when many customers are already feeling financial pressure and the pinch of inflation.
Last week, Bloomberg reported that Walmart was trying to find a solution to its tariff woes by asking some of its Chinese vendors for significant price cuts of as much as 10% to offset the impact of US levies.
According to a Wednesday post by Yuyuantantian, state broadcaster CCTV’s official social media account, Commerce Ministry officials requested the meeting with Walmart to “understand the situation.”
“If true, Walmart’s demand for Chinese suppliers to bear the full tariff burden is unreasonable and disrupts fair competition and international trade order,” the post said.
In a possible warning, it added that Chinese authorities could “take further action” if the American retailer continues to press its case for discounts. Even though asking suppliers to lower their prices isn’t unusual in China, it’s a tough proposition at the moment because many are already running their businesses with razor-thin margins.
In a statement to CNN, Walmart said its purpose was to help people “save money and live better.”
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“Our conversations with suppliers are all aimed at making our purpose a reality for millions of customers, and we will continue to work closely with them to find the best way forward during these uncertain times,” it said.
The Arkansas-based retailer doesn’t just source products from China. It has an active and thriving presence there, having entered China in 1996 and opened its first superstore and Sam’s Club in the southern megacity of Shenzhen.
Walmart has a presence in more than 100 Chinese cities. In its most recent financial year, its net sales in the country rose by 16% to $17 billion dollars, compared to the year before.