Walmart (WMT) Counters Chinese Tariffs With New Ho Chi Minh Supply Route
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The U.S. retail giant said it was extending its cross-border ocean freight service beyond China by opening two Vietnamese ports to its marketplace sellers looking to ship full-container loads.
Vietnamese Ports
Sellers who source or manufacture goods in Vietnam can now book full-container shipments from Ho Chi Minh City or Hai Phong, with inventory transported directly to Walmart Fulfilment Services (WFS) facilities across the U.S.
Sellers prepare full-container loads at either a Vietnamese or Chinese port, clear U.S. customs and then hand over the rest to Walmart's logistics network.
Walmart's existing international freight network included Shanghai, Ningbo, Yantian, Qingdao and Xiamen in China. It has helped the retailer deliver consistently strong recent international sales.
The move comes amidst Trump's tariff trade war which has seen the U.S. impose huge levies on countries importing goods into the States.
Tariff Turmoil
In July the U.S. and Vietnam secured a trade deal where Vietnamese goods exported to the U.S. will be charged at a baseline rate of 20% while products that experience transshipment will incur a 40% tariff.
Transshipment occurs when a product is made in Country A and is then shipped to Country B before arriving in Country C in an attempt to escape duties. Trump likely requested a 40% tariff on transshipped items in order to stop the flow of Chinese goods into Vietnam and then the U.S.
Chinese imports face a levy of 55% at present, which means that sellers have been looking for alternatives.
Walmart has taken a knock from the new tariff regime, having to hike prices on certain goods. To what extent this and higher inflation have hit consumer confidence and spending will become apparent when Walmart releases its Q2 earnings later this week.
Wall Street is expecting WMT to report earnings of $0.72 per share, which would represent year-over-year growth of 7.46%. Revenues for the period are expected to come in at $175.51 billion, up 3.65% from the prior-year quarter.
Is WMT a Good Stock to Buy Now?
On TipRanks, WMT has a Strong Buy consensus based on 23 Buy ratings. Its highest price target is $130. WMT stock's consensus price target is $113.86, implying a 13.23% upside.
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