What: Major US retailers, led by Costco and Walmart, are demanding price concessions from Chinese suppliers as new tariffs threaten to disrupt established supply chain relationships.

Why it is important: This coordinated pressure from leading retailers signals a fundamental restructuring of global supply chains, with implications for consumer prices and international trade patterns.

Costco Wholesale is actively pressuring its mainland China suppliers to reduce prices in response to impending US tariffs, following similar actions by Walmart earlier this month. During their recent quarterly earnings call, Costco's CEO Ron Vachris indicated the company's willingness to modify its international supply chain if tariffs lead to significant price increases. The retailer's current exposure to international markets is notable, with approximately one-third of US sales derived from imported products, though less than half of these imports originate from China, Mexico, and Canada. This move mirrors Walmart's recent supplier negotiations, which prompted Chinese officials to arrange discussions about media reports of the retailer's price reduction demands. The situation highlights the growing tension between major US retailers and their international suppliers as companies attempt to mitigate the impact of new trade policies.

IADS Notes: March 2025 data from BCG projects USD 640 billion in additional US import costs, driving widespread supply chain restructuring. This coincides with retailers offering up to 30% higher procurement prices to relocate manufacturing, while the implementation of "Trump Majeure" clauses in January 2025 demonstrates growing awareness of trade risks. February 2025 saw Walmart maintaining 66% US-sourced products despite cautious guidance, as new 25% tariffs on Mexican and Canadian imports and an additional 10% on Chinese goods force retailers to fundamentally rethink their supplier relationships and pricing strategies.

Costco is pressuring Mainland China suppliers to cut prices as tariffs loom