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Walmart says higher China tariffs will increase prices for U.S. shoppers

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(Reuters) – Walmart Inc said on Thursday that prices for shoppers will go up due to higher tariffs on goods from China as the world’s largest retailer reported its best comparable sales growth for the first quarter in nine years.

Walmart shares, which have gained 7% so far this year, jumped nearly 4% to $103.84 in early trade.

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U.S. President Donald Trump increased tariffs on $200 billion worth of Chinese imports to 25% from 10% last week. The move is widely expected to raise prices on thousands of products including clothing, furniture and electronics. China retaliated on Monday, though on a smaller scale.

Walmart Chief Financial Officer Brett Biggs said in an interview that higher tariffs will result in increased prices for consumers. He said the company will seek to ease the pain, in part by trying to obtain products from different countries and working with suppliers’ “costs structures to manage higher tariffs.”

Moody’s analyst Charlie O’Shea said the potential impact on Walmart and its shoppers from tariffs is limited by its food business. Its grocery operation, which includes fresh food, contributes roughly 56 percent to overall revenue.

We believe Walmart has the wherewithal both financially and via its vendor relationships to minimize the impact on both itself and its shopping base,

he said.

Walmart’s U.S. Chief Executive Officer Greg Foran said on a conference call the company will maintain its “low-price leadership” and “manage costs on an item-by-item basis.” But that position has been threatened, in part, by rising competition from discount chains like Aldi.

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