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US-China trade war
EconomyChina Economy

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

American retailers – under pressure at home to ‘eat the tariffs’ – are now demanding that Chinese producers split the cost of the levies

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US retail giants are now demanding that their Chinese suppliers shoulder up to two-thirds of the additional costs they are facing due to US tariffs, industry sources told the Post. Photo: AP
Kandy Wongin Hong KongandFrank Chenin Shanghai

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.
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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.

But some Chinese suppliers said they would struggle to bear the additional costs being demanded of them – especially if the current 90-day truce in the US-China trade war expires without Beijing and Washington reaching a deal.

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In mid-May, Beijing and Washington agreed to drastically scale back tariffs on each other’s products for 90 days, with the US reducing its additional duties on Chinese goods from 145 per cent to 30 per cent and China slashing its levies on US products from 125 per cent to 10 per cent.
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