Walmart, one of the nation’s biggest retailers, is telling its China-based suppliers to absorb the cost of President Donald Trump’s increased tariffs on Chinese-made products.
Sources told Bloomberg News that Walmart is asking Chinese suppliers to cut their prices — some by as much as 10 percent — so that Trump’s increased tariffs on China will be absorbed by the retailers rather than American consumers.
Chinese suppliers are reportedly trying to resist any lowering of their prices while some manufacturers are having to go outside China to source their materials.
A spokesperson for Walmart told Bloomberg that the retailer is looking to keep prices as low as possible for American consumers amid the increased tariffs on China.
The request from Walmart shows, yet again, that companies will look to absorb tariff costs despite claims from the establishment media and free trade enthusiasts that tariffs will drive inflation higher and raise prices to record levels.
Breitbart Economics Editor John Carney detailed this week how analysis has long shown that companies tend to absorb tariffs instead of passing such prices along to their customers:
A study published in AER: Insights by economists Alberto Cavallo, Gita Gopinath, Brent Neiman, and Jenny Tang analyzed the effects of tariffs imposed in 2018 and found that while import prices increased almost in direct proportion to the tariffs, the impact on consumer prices was far more limited. Their research used detailed microdata from the Bureau of Labor Statistics and retail price tracking to measure how tariffs translated from import costs to store shelves. The findings showed that while U.S. importers faced higher costs, U.S. retailers absorbed much of the burden, often reducing their profit margins instead of passing higher costs to consumers. [Emphasis added]
The study found that, in many cases, retailers adjusted pricing strategies rather than immediately raising prices on tariffed goods. Using data from two large U.S. retailers, the researchers observed that even as the tariffs increased the cost of certain Chinese imports by 20 percent, retail prices on those goods only rose by about 0.7 percent on average. This suggests that retailers opted to sacrifice some of their profit margins rather than risk losing customers by passing the full costs along. [Emphasis added]
The Economic Policy Institute (EPI) has also repeatedly found that tariffs are not responsible for the nation’s inflation.
“The timing of the tariffs clearly shows no correlation with inflation, and eliminating tariffs could not plausibly restrain it,” EPI researchers write. “The bulk of the tariffs were in place before 2020, yet, inflation only began accelerating in March 2021. Clearly, inflation was driven by many sources besides tariffs.”
Treasury Secretary Scott Bessent, a staunch supporter of tariffs, said this week that he expects companies to “eat any tariffs that go on.”
“… I’m not worried about China,” Bessent told CBS’ Face the Nation. “China will pay for the tariffs because their business model is exporting their way out of this inflation.”
John Binder is a reporter for Breitbart News. Email him at [email protected]. Follow him on Twitter here.
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