Retailer pressures Chinese suppliers to slash prices to offset impact of US tariffs

American retailer Costco Wholesale is pressuring mainland China suppliers to cut prices in response to US tariffs, The Financial Times reported, citing suppliers.

This follows Beijing officials meeting with Walmart last week to discuss media reports that the US retailer asked Chinese suppliers to slash prices to offset tariff impacts.

Costco's chief executive Ron Vachris had said that the company would consider modifying its international supply chain if tariffs result in significant price increases, during their quarterly earnings call earlier this month.

According to Vachris, about one-third of Costco's US sales come from products imported from other countries, with less than half of that originating from China, Mexico and Canada.

This came as disappointing retail sales last month added to concerns of a pullback in consumer spending in the US.

Retail sales rose by less than forecast last month and the prior month was revised down to mark the biggest drop since July 2021, according to reports.

Combined with separate data this week showing a dropoff in New York state manufacturing activity and weaker homebuilder sentiment, the reports are consistent with expectations for slower economic growth.

Companies, investors and economists are cautious on the outlook as consumer sentiment sours and signs of financial stress mount amid risks of escalating trade wars sparked by President Donald Trump.

Seven of the retail report's 13 categories posted decreases, notably motor vehicles, gasoline sales, electronics and apparel. Spending at restaurants and bars, the only service-sector category in the retail report, declined by the most in a year.

Other US retailers including Target and Best Buy have said they may have to raise prices because of Trump's tariffs, whiles weak outlooks from companies like Kohl's and Dick's Sporting Goods are casting doubt about the strength of US consumers.

Reuters, Bloomberg