Walmart Tells Chinese Suppliers to Pound Sand - Reduce Prices or Else
Walmart just made tariffs their suppliers' problem, as reported by Bloomberg. No wonder Walmart said in its recent earnings call that in 2025, tariffs would not be a material impact on the business. After all:
Walmart's bottom line will not be impacted (no!)
The consumer will not be impacted (hell no!)
Suppliers on the other hand ( 🫡 😃 )
What specific demands is Walmart making to its suppliers?
Bloomberg reported that Walmart has asked suppliers to cut their prices pretty much whatever the tariffs are - up to 10% per round of tariffs.
How might suppliers respond to Walmart's pressure?
Suppliers are savvy, however. Knowing they can source almost literally anywhere else (Vietnam for instance) this will ripple backwards through the supply chain. After all, if you could dodge a bullet, why wouldn't you?
Is this approach consistent with Walmart's historical business practices?
"Everyday Low Prices" has always been Walmart's formula. As a friend Tim Reilly said, when the sun comes up Walmart asks suppliers to lower their prices. Same when the sun comes down. It's not surprising this is the formula. It's been the playbook for decades. Long before Amazon even came on the scene, Walmart squeezed its suppliers for a pound of flesh.
What will be the long-term impact on American manufacturing?
What this is not going to do is encourage more manufacturing in America - it would take much deeper structural changes for that to happen -- instead, production will just shift to the next cheaper country... and so the world turns.
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