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Walmart will raise prices for the trade war between China and the United States

Published on Friday, May 17, 2019 – 16:55 (GMT-5)

The increase of tariffs on Chinese imports, decreed by the Trump Administration, will mean an increase in the prices of some products in Walmart Inc.

The measure is expected to generate a price increase for thousands of products, including clothing, furniture and electronic goods.

The chief financial officer of the important retail company, Brett Biggs, has said in statements to the agency Reuters that the company will try to counteract the undesired effect by getting products from different countries and working on cost structures.

"We will continue to do everything possible to keep prices low, which is what we are, but the increase in rates will lead to an increase in prices, we believe, for our customers," admitted the manager.

The news comes when Walmart, the largest retailer in the world, has reported its highest growth in nine years. The company's shares have gained 7% so far in 2019.

However, Charlie O'Shea, analyst at Moody's, considers that the impact on Walmart and in its buyers it will be limited thanks to its food business, which contributes with approximately 56% of the company's total income and which has nothing to do with the Asian giant.

The above assumes that Walmart it would have less exposure to China than other retailers because more than half of its sales come from groceries, and most of the food it sells comes from the United States and South America.

However, in general, American retailers depend heavily on China in their supply chain.

China accounted for approximately 41% of all clothing, 72% of all footwear and 84% of all travel items imported to the United States in 2017, according to a letter that several retail groups sent to the Trump administration last week.

The US president announced the increase of tariffs to Chinese imports valued at 200 billion dollars from 10% to 25%.

Meanwhile, retail sales in the United States fell in April as families reduced their purchases of vehicles and other goods, reflecting a slowdown in economic growth, after a temporary boost to exports in the first quarter.

Other retailers, in addition to WalmartThey have also recently warned that raising tariffs to China will affect their businesses. On Wednesday, Macy's He said he will raise the prices of some merchandise due to the trade war.