Wall Street Breakfast
Big retailers ask China for help ahead of tariff announcement
Wed, 02 Apr 2025
Walmart (WMT) pushes Chinese suppliers to reduce prices amid Trump tariff fears - report. (00:23) LG Energy reaches deal to buy GM's stake in Michigan battery JV for $2B. (01:56) Visa (V), American Express (AXP) seek to swipe Apple (AAPL) credit card from Mastercard - report. (02:44)Episode transcripts seekingalpha.com/wsb.Show links: Biggest stock movers Wednesday: NCNO, TTEC, GRFS and moreCoreWeave rockets on third day of trading after tepid IPO responseBig Pharma drops sharply ahead of Trump’s tariff announcementWells Fargo warns Tesla could fall 50% after deliveries, earnings, and the Cybercab rollout disappointSign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
Chapter 1: What are the challenges Walmart faces with its Chinese suppliers?
Walmart is reportedly actively pushing its Chinese suppliers to reduce prices in response to tariffs imposed by the Trump administration. According to a report by Bloomberg that cites people familiar with the matter, the Chinese suppliers are struggling to comply with these demands due to already thin profit margins.
Some Chinese manufacturers are having trouble meeting Walmart's expectations to reduce costs by up to 10% for each round of tariffs. The pressure on suppliers has led to varied responses, with some manufacturers concerned that any significant reduction in prices could lead them into financial losses.
Chapter 2: How are Chinese manufacturers responding to Walmart's demands?
A few Chinese factory owners have started to explore alternative manufacturing locations elsewhere in Asia, like Cambodia and Vietnam, to maintain both their long-term relationships with U.S. customers and profitability. The sources added that Walmart and its suppliers are negotiating across product categories not only by country of origin.
Chinese state media criticized Walmart's approach, suggesting that demanding such price cuts could disrupt fair competition and potentially harm both U.S. and Chinese businesses. The retail giant has been diversifying its supply chain to reduce reliance on China, but the country remains a crucial source for various goods like clothing, toys, and electronics, among others.
Chapter 3: What is Walmart's strategy to diversify its supply chain?
It has been widely reported that Costco and Target are also pushing for discounts. South Korea's LG Energy Solutions said on Tuesday it agreed to acquire the assets held by General Motors in its Michigan electric vehicle battery joint venture for $2 billion.
Chapter 4: What is the significance of LG Energy's acquisition in the EV market?
GM has been scaling back its EV plans because of uncertainty about the future of EV battery production and consumer tax credits under the Trump administration, saying in December that it planned to sell its stake in the Michigan plant. LG said the transaction costs were part of its capital spending plan announced earlier this year and could be lower than $2 billion.
The two companies continue to maintain two other U.S. battery plant joint ventures operating in Ohio and Tennessee. With the acquisition, LG Energy is expected to produce batteries for Toyota. Visa has offered Apple $100 million to switch its popular co-branded credit card to its payment network from MasterCard.
Chapter 5: How is Visa attempting to capture Apple's credit card business?
The Wall Street Journal reported on Tuesday, citing people familiar with the matter, that American Express has also been seeking the roles of both network provider and the card issuer. There's already been reporting that JPMorgan Chase and Synchrony Financial have been competing to replace Goldman Sachs as the bank issuing the Apple card.
The competition among banks is expected as Goldman pulls back from consumer finance. Apple, however, is expected to choose a network for its card before it selects the bank to replace Goldman. Visa is aggressively pitching Apple, making an offer similar to the upfront payment it offered when Costco selected a network for its card about 10 years ago.
According to the report, MasterCard, though, is fighting to keep its role as the card's network. Now for a look at what's trending on Seeking Alpha. CoreWeave rockets on its third day of trading after a tepid IPO response. Big Pharma drops sharply ahead of Trump's tariff announcement. And Wells Fargo warns that Tesla could fall 50% after deliveries, earnings, and the cybercap rollout disappoint.
On our Catalyst Watch for the Day, Nintendo is holding a reveal event for the Nintendo Switch 2. A launch of the next-generation console is expected as early as June. Floor will hold a strategy update webcast to discuss the company's strategic plan, followed by a live question-and-answer session. Yext will hold an Investor Day event.
Management will present the company's vision, strategy, and financial objectives, followed by a live Q&A. Merix will hold an Investor Day event. The event will feature presentations from the company's business heads, providing a comprehensive review of operations and growth initiatives. Shareholders with Nevro will vote on the takeover offer from Globus Medical.
And the National Retail Federation will hold a State of Retail and the Consumer 2025 event. The CEOs of BJ's Wholesale Club and Tapestry, along with the U.S. President of Walmart, will be some of the notable speakers. Now for a look at the markets today ahead of the opening bell. Dow, S&P and Nasdaq futures are in the red. Crude oil is flat at $71 a barrel. Bitcoin is up 0.8% at $85,000.
Gold is up 0.5% at $3,100. In the world markets, the FTSE 100 is down 0.7% and the DAX is down 0.6%. T-TECH Holdings is on our list of the biggest movers of the day pre-market. T-TECH is up 25% after the company said it's ready to engage with the CEO on his $6.85 a share proposal. On today's economic calendar, at 8.15 a.m. the ADP employment reports and at 10 a.m. factory orders.
That's it for today's Wall Street Breakfast. Thanks for listening. To take full advantage of Seeking Alpha, join the highest quality community of real investors discussing stocks and ETFs at seekingalpha.com slash subscriptions. I'm your host, Julie Morgan. Go out and make it a great day.
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