Walmart is finding itself in a precarious position amidst the escalating trade war between the United States and China. According to a state media report, Chinese officials summoned executives from the US retail giant on Tuesday to investigate allegations that Walmart had pressured its Chinese suppliers for discounts to mitigate the impact of rising tariffs imposed by the Trump administration.

The backdrop to this investigation is the series of escalating tariffs between the two economic powerhouses. The Trump administration doubled tariffs on all Chinese imports to 20% recently, prompting China to respond with retaliatory tariffs targeting US agriculture imports. This tit-for-tat trade policy has created a challenging environment for businesses operating between the two countries.

Many businesses are struggling to navigate the complexities and uncertainties arising from these tariff announcements. Retailers, in particular, are concerned about the potential need to raise prices, which could further strain consumers already facing financial pressures and inflation.

Bloomberg reported that Walmart was seeking price cuts of up to 10% from some of its Chinese vendors to offset the impact of US levies. State broadcaster CCTV's social media account, Yuyuantantian, reported that Commerce Ministry officials requested the meeting with Walmart to “understand the situation.” The post went on to state that demanding Chinese suppliers bear the full tariff burden would be unreasonable and would disrupt fair competition and international trade order. The post further warned that Chinese authorities could “take further action” if the American retailer continues to press its case for discounts.

While requesting suppliers to lower prices is not uncommon in China, the current economic climate makes it a difficult proposition, as many suppliers are already operating on thin margins.

In a statement to CNN, Walmart emphasized its commitment to helping people “save money and live better.” The company stated that its discussions with suppliers are aimed at achieving this goal for millions of customers and that it will continue to work closely with them to navigate these uncertain times.

Walmart has a significant presence in China, having entered the market in 1996 and opened its first superstore and Sam’s Club in Shenzhen. The retailer now operates in over 100 Chinese cities. In its most recent financial year, Walmart's net sales in China rose by 16% to $17 billion.