Before Wal-Mart commented on the impact of tariffs, Macy's (M.N) issued a similar warning on Wednesday. Macy's Chief Executive Jeff Gennette said tariffs on Chinese goods are hitting its furniture business and warned investors that tariffs will put their clothing and accessories in jeopardy.
US President Trump last week raised the import tariff of $200 billion on Chinese exports to the United States from 10% to 25%. It is widely expected that this move will increase the prices of thousands of commodities including clothing, furniture and electronic products. China also adopted retaliatory tariffs on Monday, but the scale involved was small.
Wal-Mart Chief Financial Officer Brett Biggs said in an exclusive interview that tariff increases will lead consumers to face price increases. He said the company will find ways to alleviate the pain, in part by acquiring goods from other countries and working with suppliers to "cost structures to cope with rising tariffs."
Moody's analyst Charlie O'Shea said the potential impact of tariffs on Wal-Mart and its shoppers will be limited, supported by the company's food business. In Wal-Mart's overall revenue, 56% of the groceries business is from fresh food.
“We believe that Wal-Mart's financial strength and relationships with its suppliers can minimize the impact of this on itself and its customers,” he said.
Greg Foran, CEO of Wal-Mart USA, said in a conference call that the company will maintain a strategy of “low-cost lead” and “management of commodity costs one by one”. However, due to increased competition from discount chains such as Aldi, the company's position is threatened to some extent.
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