Costco says trade war with China will eventually lead to higher prices


As a new tariff freeze from China comes into force, trade-dependent Washington rents will penalize more impact on the economy. (May 29)

Costco became the last dealer to say that the trade war between China and the United States is likely to lead to higher prices, but the team giant says it is taking steps to resist the fight.

"At the end of the day, prices will go up on things," said Richard Galanti, Costco's CFO, during a earnings call with investors. "We hope that the ebbs and flow of relationships between our countries will improve in that respect."

The Trump administration pulled up its trade dispute with China this month as it dumped US $ 200 billion in imported Chinese goods from 10% to 25%. The president also threatened to add a 25% tariff to almost all the remaining $ 325 billion in products sourced from China.

Costco only begins to see the effect of the latest tariff increases, affecting goods such as furniture, bicycles and luggage

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In some cases, the layer giant looks to source certain goods from other countries. "We've gone to each vendor to see what we can do to cut costs," Galanti says. "In some cases, we have reduced the ordering obligations …. And we have made use of lower prices for some US goods that have been affected the other way."


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Industry watchers have said the fare struggle could make things ranging from smartphones to clothing more expensive, and also accelerate the conversion of stores.

But tariffs do not always scare consumers. Despite the increased import costs, outdoor furniture has sold well, says Galanti. "It's hard to predict what the effect will be," he says.

For the quarter ended May 12, Costco reported that $ 906 million in net income or $ 2.05 diluted earnings per share was introduced. It was up from $ 750 million, or $ 1.70 per share, in the same quarter last year.

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