Costco prognosticates price rise with the recent China-US trade war

Tariffs from China causes an immediate effect on the economy

Costco just got added to the long list of companies that have said that the trade war amid the US and China is going to lead to higher prices, the warehouse magnate is, however, looking to withstand the battle by taking necessary precautionary measures.

“At the end of the day, prices will go up on things,’’ said Richard Galanti, Costco’s chief financial officer, during an earnings call with investors.  “We’re hopeful the ebbs and flows of the relations between our countries improve in that regard.’’

The current trade quagmire that we find ourselves comes after the Trump administration ratcheted up its trade battle with China this month when it hiked U.S. tariffs on $200 billion in imported Chinese goods from 10% to 25%.

The president has also cautioned to add a 25% tariff on essentially all the remaining $325 billion in products brought in from China.

Costco is just driving to see the effects of this decision by the Whitehouse as in effect of the most recent tariff increases the prices of goods like furniture, bikes, and luggage has begun to fluctuate.

The warehouse giant has been forced to look at other alternatives where they source certain goods from other countries.

In some instances, the warehouse giant is contemplating to source certain goods from other nations. “We’ve moved to every supplier to see what we can do to lessen costs,’’ Galanti said.

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“In some situations, we’ve decreased order responsibilities, we’ve taken benefit of economical pricing on some U.S. items that have been stricken the other way.”

The industrial pundits have also forewarned the market of the tariff battle driving up the prices of every form of goods, from smartphones to clothes, it will also cause multiple stores to shut down.

What continues to be seen is how many companies can find means to make it through the trade war without missing too much in the process.

 

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