US retail giants pushing Chinese suppliers to shoulder up to 66% of tariff costs

American retail giants are now demanding that their Chinese suppliers shoulder half to 66 per cent of the cost of US import duties, as the ongoing US-China trade war ramps up pressure on businesses’ bottom lines, industry sources told the Post.

US retailers have been locked in talks with Chinese producers for weeks over how to handle the additional costs caused by the trade war, with the firms facing intense political pressure at home to “eat the tariffs” and keep prices stable.

Walmart and other major US retail groups previously agreed to bear the full cost of the tariffs when they asked their Chinese suppliers to resume shipments in late April, industry sources told the Post at the time.

But global brands including several US retail giants are now pushing suppliers in both China and parts of Southeast Asia to absorb a large chunk of the cost of the levies, according to sources from suppliers serving companies including Walmart, Target, Nike, Puma and Adidas.

“Most of our customers, the garment vendors exporting to major retailers and brands, are being asked to cover 50 to 66 per cent of the current tariffs,” said an executive at a fashion supplier, which produces and sources from China and Southeast Asia and then sells across the United States and Europe.

The negotiations remain fluid and the details of how the tariff costs will be divided have not yet been finalised, the sources stressed, as both sides remain in constant contact as they try to navigate a “tough time” for the industry.

South China Morning Post