[Source/Observer Network, Liu Chenghui] Under the pressure of Trump's tariffs, American retail giants like Walmart once demanded that Chinese parties bear the cost of tariffs. After being contacted by Chinese authorities, they notified Chinese suppliers to resume shipments and agreed to bear the full cost of tariffs. However, it seems that there is a new development in the situation.

On May 30, Hong Kong-based English-language media South China Morning Post quoted industry insiders as disclosing that under the pressure of "absorbing tariff costs domestically," Walmart, Target, Nike, Puma, Adidas, and other retail brands are now requesting Chinese and Southeast Asian suppliers to shoulder most of the high tariffs, bearing 50% to 66% of the cost of U.S. import tariffs.

According to insider sources, the negotiations are still ongoing, and the details of how the tariff costs will be apportioned have not been determined. Many Chinese suppliers find it difficult to bear such high cost-sharing ratios. Some retailers are also adjusting their supply chains, and some brands have already stated they will raise product prices.

The report states that U.S. retailers have been negotiating for several weeks with Chinese suppliers on how to apportion the cost of tariffs. American companies face immense domestic political pressure to "absorb tariffs" to maintain price stability.

Although major U.S. retailers like Walmart have agreed to bear the full cost of tariffs, sources from suppliers who provide goods to Walmart, Target, Nike, Puma, and Adidas say that global brands, including several American retail giants, are now pushing Chinese and Southeast Asian suppliers to bear most of the tariff costs.

On May 14, in Los Angeles, California, USA, customers shop at a Walmart store. Visual China.

An executive from an apparel supplier sourcing from China and Southeast Asia and selling to the U.S. and Europe said: "Most of our apparel supplier clients exporting to large retailers and brands have been asked to bear 50% to 66% of the current tariffs."

The source emphasized that the negotiations are still ongoing, and the specific allocation of tariff costs has yet to be finalized. Both sides continue to communicate, trying to find solutions during this "difficult time."

On May 12, U.S. and Chinese trade representatives reached an agreement in Geneva, Switzerland, agreeing to significantly reduce tariffs within 90 days, cutting rates by 115%.

However, some Chinese suppliers say they find it hard to bear the additional costs currently being required, especially if no agreement is reached between China and the U.S.

It is predicted that if no agreement is reached before August 12, the tariff rate may soar back to triple digits.

A source from a stationery manufacturer in Zhejiang Province told the South China Morning Post that they have been discussing "post-tariff truce emergency plans" with Walmart and other U.S. retailers.

According to previous agreements between Walmart and this stationery manufacturer, Walmart will cover all tariff costs up to August, but Walmart has not yet placed orders after August.

This source said they can bear up to about 30% of the additional tariff costs but "are absolutely unable" to bear 50% or more of the tariffs. The manufacturer has not yet reached an agreement with Walmart.

The source added: "We are preparing for the worst while hoping for the best."

Regarding the above news, Walmart, Target, Nike, Puma, and Adidas have not yet responded to requests for comment from the South China Morning Post.

On March 11, regarding Walmart's request for significant price reductions from Chinese suppliers, the Ministry of Commerce and other relevant departments in China contacted Walmart to understand the situation. Experts pointed out that Walmart's actions might violate commercial contracts and disrupt normal market trading order.

On April 24, the WeChat official account "Walmart China" released a message stating that to actively respond to the call for domestic and foreign trade integration, Walmart has opened a green channel for qualified foreign trade enterprises, simplifying access procedures and accelerating approval efficiency to help related enterprises quickly expand into the domestic market.

U.S. media believe that Walmart's active response to the Chinese government's call aims to "help Chinese exporters sell products domestically" and is also "to balance its previous approach of asking Chinese suppliers to bear part of the increased tariff costs."

According to the South China Morning Post on April 29, Walmart has notified some Chinese suppliers to resume shipments. It was reported that a stationery and office supplies exporter in Ningbo received Walmart's notice to resume normal shipments to the U.S. The company stated that the cost of new tariffs would be borne by American buyers.

The South China Morning Post noted that some Chinese suppliers hope to offset the impact of tariffs through export-to-domestic sales, but this is not easy due to differences in product specifications and types between domestic and international markets. An analyst gave an example: pants sold in the U.S. market are often longer than those domestically, and popular items like oven mitts and Christmas cards in the U.S. do not have much domestic demand.

On the other hand, U.S. retailers are facing political pressure not to increase prices. Doug McMillon, CEO of Walmart, warned on May 15 that Walmart cannot bear all the costs of the trade war and will be forced to raise product prices. Two days later, Trump publicly pressured Walmart and China to bear the cost of tariffs.

On May 21, Nike announced it would start raising prices to offset the high costs brought by U.S. tariffs; Germany's sports apparel brand Puma adjusted its supply chain, reducing direct shipments from China to the U.S., but did not rule out the possibility of price hikes; Adidas stated in its April 29 statement that it had "not yet made a final decision" on its strategy but admitted that "tariffs will ultimately be passed on as price increases"; Target CEO Brian Cornell said on May 21 that price hikes were a "last resort" to cope with high tariffs.

U.S. Treasury Secretary Besten said in an interview on May 18 that Walmart would absorb part of the tariff costs itself, but he also acknowledged that some of the increased tariff costs would eventually fall on consumers.

Notably, in the two weeks following the U.S.-China tariff agreement, the Trump administration not only escalated restrictions on Chinese chips but also made tough statements about revoking Chinese student visas, seriously undermining the consensus reached between both sides.

On May 30, Foreign Ministry spokesperson Lin Jian presided over a regular press conference. A reporter from Agence France-Presse asked: U.S. Treasury Secretary Besten told Fox News in an interview that trade talks with China have stalled somewhat and hinted that the involvement of leaders from both countries might be needed. What does China think about this? Can the Foreign Ministry introduce the latest progress in trade talks? Does China still have confidence in reaching a trade agreement with the U.S.?

In response, Lin Jian said: "China has repeatedly clarified its position on the tariff issue. For specific questions, please consult the relevant Chinese authorities."

This article is an exclusive contribution from Observer Network and cannot be reprinted without permission.

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