Walmart and Target have resumed business with some of their Chinese suppliers, after pausing orders for a few weeks due to uncertainties over the imposition of steep US tariffs, two Chinese factories have told CNN.
The resumption came days after a meeting last week between US President Donald Trump and the heads of retail giants Walmart, Target, Lowe’s and Home Depot — who warned the president that store shelves across America could soon be empty.
The resumption of business, even if partial, suggests retailers are attempting to ensure their stores remain stocked as tariffs threaten to disrupt their supply chains, which are crucial to their own bottom lines as well as to the survival of thousands of factories in China.
Trump’s 145% levies on Chinese goods have led many American retailers, both large and small, to suspend or cancel outright previous agreements with their suppliers in the country. The two that spoke to CNN said they supplied to Walmart and Target, respectively, and that previous orders had been in limbo for weeks.
The scope of the suspension, as well as the level of resumption, is unclear. CNN has reached out to Walmart and Target for comment.
China and the United States, the world’s two largest economies, remain locked in a trade war with no clear off-ramp. Both are refusing to back down from the sky-high tariffs they have imposed on each other, with no sign of trade talks on the horizon.
Vivi Tong, whose factory in China’s central Anhui province makes toy cars, told CNN that orders from Walmart resumed last week, after Trump indicated that levies may come down.
“American supermarkets don’t have much inventory left, and we’re also waiting to see how the situation develops. Our toys are low value-added products – if tariffs drop to around 30%, it will be easier for our customers to accept,” she said.
Tong said her clients would normally have placed preliminary orders during this time of the year. The period from May to October is usually the peak time for toy production and shipment, ahead of the year-end holiday season.
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Hong Kong newspaper Ming Pao reported on Saturday that Walmart had resumed ordering from some Chinese exporters, citing two ceramics suppliers attending a major trade fair in the city of Guangzhou. One of them told the newspaper that the orders were only “partially resumed.”
Last month, even before Trump massively escalated tariffs on China from the initial 20% to the current triple-digit level, Walmart pressured its Chinese suppliers for discounts, which upset Beijing. It even prompted China’s Commerce Ministry to summon Walmart executives for talks.
Resuming trade
Michael Hart, president of the American Chamber of Commerce in China, declined to comment specifically about Walmart but said a resumption in shipments was not a surprise.
“This fits the trend that we’re hearing about here in China, where companies are in discussions with the government about getting certain items and products on the tariff exemption lists, especially where these products are deemed critical to the country or cannot be supplied by anyone else,” he said.
Tong said her customers were still very cautious, and she barely shipped anything to the US this month. However, American retailers are asking for discounts, which she has agreed to.
“This year, many of our customers are demanding price reductions – there’s really nothing we can do about it,” she added.
Allen Yan, who runs factories in the eastern province of Zhejiang making swimming pool supplies, said he got word on Monday to send out a batch of products for Target, which had suspended that shipment for two weeks. Business with other clients, Costco and Sam’s Club, has not resumed.
“In two months, the shelves in the US will probably be empty,” Yan said, adding that he had refused to give discounts.
On Monday, an editorial published by Chinese state-run tabloid Global Times urged Washington to reflect on the Walmart news “carefully,” as it demonstrated “reckless tariff policies pose a severe test to their (companies) product pricing and supply chain systems.”
“It is hoped that the US side will learn a lesson from this incident, promptly correct its misguided tariff policies, and return to the right path of engaging in dialogue with China,” it said.
Jobs affected
While official Chinese media is talking tough, it’s not just American retailers and consumers that could be affected.
China’s export industry accounts for about 18 million domestic jobs, the Ministry of Commerce has said, and the interconnected business relationships forged over decades between the US and China make both sides vulnerable.
Rachel Zhang, whose textile factory sells blankets and cushions to multiple retailers including Walmart, Costco and Target, told CNN that orders had been halted in early April.
Zhang said she could only count on smaller orders from European countries and Japan, so she’s trying to sell her products to domestic market in the meantime. But the uncertainties pose a huge challenge for her prospects.
“The key question is: How many months into the future are we talking about? Six months? Nine months? Businesses simply can’t wait that long,” she said.
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“In the end, it’s the small and medium-sized enterprises … that will end up paying the price,” she added.
Beijing sought to put a brave face on the situation at a government press conference on Monday. Sheng Qiuping, deputy minister of commerce, said Beijing would enhance financial and policy support for the country’s exporters in the face of US tariffs.
The government will also “actively assist exporters to respond to external risks and challenges” by facilitating their transition to domestic markets and diversification into other markets.
China will “continuously enrich the toolbox of policies to stabilize foreign trade and introduce new incremental policy measures as needed,” he said.