Mnuchin Says He Talked to Walmart CFO as New Tariffs Loom
Mnuchin Says He Talked China Tariffs, Prices With Walmart CFO
(Bloomberg) -- Treasury Secretary Steven Mnuchin said the Trump administration is keeping watch on how tariffs on Chinese products will affect prices on store shelves, a nod to the growing risk the trade war with Beijing could trigger a consumer backlash.
Mnuchin said Wednesday he spoke with Walmart Inc. Chief Financial Officer Brett Biggs, who has warned that duties on Chinese imports will raise prices for consumers. His comments came in response to questions from Democratic Representative Benjamin McAdams of Utah. The lawmaker asked what to tell parents in his district if higher costs for everyday goods means they can’t afford essentials like baby diapers and infant formula.
“I am monitoring this situation carefully,” Mnuchin told the House Financial Services committee. “I was on the phone with the CFO of Walmart, which obviously is one of the biggest sellers of the items that you’ve described specifically. I understand from Walmart what things they can source from other areas and what items they can’t.”
Mnuchin added that he speaks with Walmart officials on a “regular basis.”
Biggs said last week that “increased tariffs lead to increased prices” and that “there are some places where, as we get tariffs, we will take prices up.”
The trade war between the world’s two-biggest economies has so far had a muted effect on U.S. consumer prices, with inflation running below the Federal Reserve’s target. But retailers are warning the recent escalation in the tariff conflict will force them to pass on the cost to consumers, an outcome that presents risks for Trump as he seeks re-election next year.
"We are viewed as an important bellwether for the economy so it’s not uncommon for us to have conversations with administration officials," a representative for Walmart said Wednesday.
Walmart isn’t the only company sounding the alarm. Home Depot Inc. estimated Tuesday the hit to product costs could be $1 billion a year. Department-store chain Kohl’s Corp. partly blamed an 11% cut to its profit outlook on the U.S.’s recent move to raise tariffs on Chinese goods.
Trade talks between Beijing and Washington stalled this month as Trump accused China of backing out of a deal that was taking shape with U.S. officials, saying China reneged on an agreement to enshrine a wide range of reforms in law. Trump increased levies on $200 billion in Chinese imports to 25% from 10%, prompting retaliation from Beijing.
The U.S. has also released a list of about $300 billion in Chinese goods that could face additional tariffs, including clothing, toys and mobile phones. If the U.S. follows through, tariffs imposed since last July would cover essentially all imports from the Asian nation.
Enormous Progress
Mnuchin told lawmakers that two sides had made “enormous progress” toward a deal before the latest standstill in talks.
“Unfortunately, China has taken a big step backwards,” Mnuchin said. “Sometimes, you gotta go backwards before you can go forwards. I’m still hopeful we can get back to the table.”
Trump and his Chinese counterpart Xi Jinping will most likely meet at the end of June, Mnuchin said, likely referring to the prospect of a meeting at the Group of 20 summit in Japan on June 28-29. “The idea is not to have tariffs. The idea is for them to treat our companies fairly,” Mnuchin said.
Companies have until June 17 to file written comments on the next round of U.S. tariffs and they can testify at a public hearing. Businesses can also apply for tariff-exclusions for certain products as they have done in previous rounds.
“We haven’t made any decisions yet but we will be especially sensitive to the consumer items” that affect people on tight budgets and who have children, Mnuchin said.
The administration will look at granting exemptions from the tariffs on items that “impact certain consumers,” Mnuchin told reporters after the committee hearing. “We’re going to be very careful with this.”
--With assistance from Matthew Boyle.
To contact the reporter on this story: Saleha Mohsin in Washington at smohsin2@bloomberg.net
To contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, ;Margaret Collins at mcollins45@bloomberg.net, Andrew Mayeda, Sarah McGregor
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