WASHINGTON – Walmart said on Thursday that US President Donald Trump’s decision to increase tariffs on Chinese imports will force the world’s largest retailer to raise prices at its stores.
“We’re monitoring the tariff discussions and are hopeful that an agreement can be reached,” Walmart Chief Financial Officer Brett Biggs said in a conference call with reporters.
“We want to manage margins with customers and shareholders in mind. We have mitigation strategies that have been in place for months. But increased tariffs will increase prices for customers,” he said.
Biggs also discussed Walmart’s results for the first quarter of 2019, when the chain’s earnings exceeded analysts’ expectation.
The figure for comp sales – referring to sales at existing stores – rose 3.4 percent, its best first-quarter performance in nine years.
Walmart, which takes in upwards of $500 billion annually worldwide, runs more than 5,000 stores in the United States and two-thirds of the merchandise sold in those units comes from domestic sources.
Grocery sales represent 56 percent of Walmart’s business in the US.
The company relies on Chinese imports for 26 percent of the products sold in its US stores.
The signal from Walmart about tariff-related price hikes follows similar comments on Wednesday from the CEO of the Macy’s department store chain.
Jeff Gennette said during an earnings call with analysts that Macy’s would be hard-pressed to “find a path” that would allow the chain to avoid increasing prices for consumers.
Trump said Monday that he was prepared to impose tariffs on virtually all Chinese imports to the US.
He responded after China increased from 10 percent to 25 percent the tariffs it levied last year on $60 billion worth of US imports.
Beijing was retaliating for Trump’s decision last week to enact an identical increase in the US import duties applied since last year to $200 billion worth of Chinese products.
Trump, however, said he was still hopeful about achieving a deal and revealed that he planned to meet face-to-face with Chinese President Xi Jinping at the June 28-29 G20 summit in Osaka, Japan.
“We have a very good relationship. Maybe something will happen. But we’re going to be meeting, as you know, at the G20 in Japan. And that will be, I think, probably, a very fruitful meeting,” he said Monday in the Oval Office.
In 2018, the US imported nearly $540 billion worth of Chinese products, while its exports to China totaled $120 billion.
Trump blamed Beijing for the impasse in the trade negotiations.
The “sticking point” in the latest round of talks last week was Beijing’s resistance to the idea of enshrining in Chinese law measures about respecting the intellectual property of US firms operating in China, White House chief economic adviser Larry Kudlow said Sunday.
The Chinese government is said to prefer to implement the changes via administrative orders.