Weeks after President Donald Trump imposed new duties on China-made products, Costco is hitting up its suppliers for discounts.
According to a report from the Financial Times, two of the big-box stores’ mainland China manufacturers confirmed that it is seeking price cuts due to the added 20-percent tariff burden.
The news comes after the wholesaler’s CEO, Ron Vachris, noted on an earnings call earlier this month that Costco would weigh the possibility of revising its supply chain if the duties significantly raise prices on imported products.
Vachris said “it is difficult to predict the impact of tariffs, but… our goal will be to minimize the impact of related cost increases to our members.” He also noted that only about one-third of Costco’s sales in the U.S. are goods coming from outside the country, and less than half of those items are sourced from China, Mexico or Canada.
That’s a different story from that of competing American retail giant Walmart, which said last month that 40 percent of its sales are generated through products like apparel, toys and electronics—many of which are sourced from China and countries that could be targeted with new duties, like India.
Wall Street analysts projected that the national chain’s revenue growth will slow to 4 percent in 2025 from 5 percent last fiscal year based on the tariff anxiety. This outlook prompted the retailer to reach out to its China-based suppliers and lobby for price cuts—a prospect Chinese officials rebuked. “Walmart’s demand for Chinese suppliers to bear the full tariff burden is unreasonable and disrupts fair competition and international trade order,” a post on a state-sponsored social media account read.
U.S. fashion industry trade groups, meanwhile, are eager to make their voices heard in an effort to stave off new duties before the administration’s self-imposed April 2 deadline. After receiving detailed reporting from Commerce Secretary Howard Lutnick on America’s trade deficits, the president has said he will make moves to address any inequities through “reciprocal” tariffs.
The administration solicited public comments on the matter through March 11. The Office of the U.S. Trade Representative (USTR) said it’s taking stock of those responses while it’s “reviewing and identifying any unfair trade practices by other countries,” with the goal of “recommending appropriate actions to remedy such practices and reporting to the President proposed remedies in pursuit of reciprocal trade relations.”
U.S. Fashion Industry Association (USFIA) president Julia Hughes submitted comments on behalf of the Washington trade group’s members.
“We recommend that the most successful policy to achieve trade reciprocity would be for the United States to lower the tariff rates of products for which our trading partners apply lower tariff rates,” she wrote. “For consumer products such as textiles and apparel, this would help combat inflation and assist consumers who struggle to afford basic necessities.”
With the apparel and footwear sector already bearing the brunt of disproportionately high tariff rates, American Apparel and Footwear Association (AAFA) vice president of trade and customs policy Beth Hughes warned that layering on new duties would hurt lower-income Americans, as they’d see inevitable price increases at retail. What’s more, such actions would drive up the market for illicit trade, causing bad actors to become more aggressive about evading duties through practices like transshipment.
Hughes wrote that the group was especially concerned about recent tariff threats against Western Hemisphere neighbors Canada and Mexico in light of the forthcoming review of the U.S.-Mexico-Canada Agreement (USMCA).
“Canada is a key export market for U.S. made apparel and footwear while Mexico is a major source of a wide variety of apparel, including denim imports,” he wrote. “Not only does the threat of tariffs cast uncertainty but it also undermines future investment and nearshoring opportunities.”
In a rare moment of synchronicity on the issue of tariffs, National Council of Textile Organizations (NCTO) president and CEO Kim Glas agreed, saying that while the group supports tariffs that address “unfair trade,” it is advising the Trump administration to “take a targeted approach to raise tariffs on specific countries that disrupt markets through the use of blatantly unfair and often illegal trade practices,” like China.
“We must preserve and strengthen existing trade relationships with U.S. free trade agreement (FTA) countries in the Western Hemisphere that offer valuable markets for U.S.-made textiles,” she added. “We strongly believe that reciprocity should not mean a race to the bottom with lower tariffs on imports from other countries into our market. Rather, reciprocity should hold bad actors accountable for systemic unfair trade practices that have hurt domestic manufacturers.”
The National Retail Federation (NRF) opposes broad-based duties, saying in its public comments that “high, across-the-board tariffs will undermine the economic growth signaled by the other features of the president’s agenda and have lasting negative consequences for consumers and workers.”
“If the goal of reciprocal tariffs is to enter into negotiations to remove barriers to trade, this will unlock economic growth and reduce prices for consumers. However, if the goal is primarily to raise tariffs, then the opposite is true,” vice president of supply chain and customs policy Jonathan Gold wrote.
Gold pointed out that there are many categories where U.S. tariffs are higher than those of the country’s trading partners, including low-value footwear and apparel. Should reciprocal duties be implemented, the burden of increased prices would fall squarely on the shoulders of low- and middle-income shoppers, he said.
Retaliatory duties levied by countries across the globe are also sure to follow should the administration move forward with its tariff plans, he added. “We are already witnessing our trading partners respond to strong tariff actions by the administration,” Gold wrote, noting that American exporters, including farmers and manufacturers, will likely lose critical access to certain foreign markets.
Instead of wielding tariffs indiscriminately, “We need to focus on key high-priority sectors where it makes sense to return manufacturing home or areas where there is strategic competition,” the NRF leader said. “High tariffs on everyday household goods, which could raise consumer prices, should not be the focus of such a policy.”
Companies from across the U.S. manufacturing and retail sectors weighed in with their own varied comments, which illuminated both upsides and downsides to aggressive tariffs and trade strategy.
North Carolina-based textile maker Parkdale Mills noted that illegal shipments are making their way into the U.S. through USMCA or Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) countries as the practice of leveraging fake HTS codes and certificates of origin to ship non-FTA-qualifying goods has become more common, costing domestic industry hundreds of thousands of dollars annually.
Heilig’s comments focused on reforming the de minimis trade exception, which allows shipments worth $800 or less to enter the country duty free.
“Each week millions of pounds of product move through our free trade agreement partner countries illegally causing significant damage to the domestic textile industry,” the group’s chief executive, Charles Heilig, wrote. “These transshipments steal opportunity from the U.S. worker and hand it to a foreign entity who is not interested in following our current trade laws.”
But on the other side of the issue, North Carolina-based NC Upholstery, LLC wrote to oppose the forthcoming tariffs on Canadian products and inputs, saying that it estimates 50 percent of its business is in peril due to the retaliatory duties from the Canadian government.
“This tariff on USA to Canada will devastate the furniture manufacturing industry in the state of North Carolina, the furniture capital of the world,” the group wrote.
The Canadian government, too, weighed in on the issue through the official channel for public comments.
“Canada-U.S. trade is fair, balanced and reciprocal, with both countries benefitting from the longstanding, tariff-free access to each other’s markets that contributes to integrated North American value chains and supports the competitiveness of U.S. and Canadian businesses in global markets,” the Canadian Embassy wrote. “Our trade relationship is in many ways a model for others. And we are strongly committed to reinforcing our economic partnership in ways that work for both countries.”
