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article imageWalmart warns Trump's trade war will hit regular Americans hard

By Karen Graham     Sep 21, 2018 in Politics
About two weeks ago, Walmart Inc sent a letter to U.S. Trade Representative Robert Lighthizer. The company warned that American consumers will end up being the ones hurt by the $200 billion in new tariffs on Chinese goods.
In the letter, America's largest retailer said it is "very concerned" that expanded tariffs on Chinese imports would hurt its customers, its suppliers, and the U.S. economy. "The immediate impact will be to raise prices on consumers and tax American business and manufacturers," Walmart said.
President Donald Trump said on Monday that he would impose 10 percent U.S. tariffs on about $200 billion worth of Chinese imports. Walmart was not the only retailer to lobby the Trump administration over the tariffs.
Other retailers, including Target, Ace Hardware and Joann fabric, as well as a number of craft stores have reached out to the administration. Target said the tariffs will "hurt American consumers," and said working families will pay more for school and college essentials like notebooks, calculators, binders and desks.
And if consumers think the tariffs already imposed by the Trump administration have not impacted consumers, The Bureau of Labor Statistics offers some proof. Washing machines were hit with 20 percent tariffs earlier this year — and laundry equipment prices spiked close to 20 percent in recent months.
A washing machine.
A washing machine.
"Walmart is in a tough position with the tariffs. Of the company's $500 billion in sales last year, about $50 billion was linked to Chinese imports or investments in Chinese businesses, estimated Greg Melich, a retail analyst at MoffettNathanson.
And raising prices is not what Walmart, a company that controls 10 percent of the U.S. retail market (with a customer base of low- and middle-income Americans) wants to do.
"Given that Walmart was such a huge source of cheap products for low-income customers over the years, this really hurts the very people that Trump professes to help," said Sucharita Kodali, a retail analyst for research firm Forrester.
In its letter, Walmart also warned of the numerous ways businesses could deal with the tariffs. It is effectively a choice between increasing prices for customers or taking a hit to their profits by absorbing the increased costs themselves.
"Either consumers will pay more, suppliers will receive less, retail margins will be lower, or consumers will buy fewer products or forego purchases altogether," Walmart said.
More about Trade war, Walmart, Consumers, retail margins, China
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