Costco says prices will go up due to tariffs, trade war between US, China
LOS ANGELES - Costco Wholesale Corp. reportedly said prices will increase due to the trade war between the U.S. and China as well as increased tariffs.
Costco's Chief Financial Officer Richard Galanti said on a post-earnings call with analysts on Thursday that the “situation is pretty fluid,” according to Reuters.
“At the end of the day, prices will go up on things. What’s interesting is that it’s hard to predict what the impact is,” Galanti said. “We want to be the last to raise them. And when prices are going down, we want to be the first to lower them. We’re not afraid to use some of those monies to again drive business.”
Costco is looking to accelerate shipments before certain tariffs are put into effect, Reuters reported. The company, which sells items wholesale for lower prices, also said it would source goods from other countries.
On Thursday, Costco announced its third quarter operating results and the first 36 weeks of fiscal 2019, which ended May 12, 2019, Fox Business reported. Net sales for the quarter increased 7.4 percent, to $33.96 billion, from $31.62 billion last year. Net sales for the first 36 weeks increased 8.3 percent, to $102.90 billion, from $95.02 billion last year, according to the report.
This month, China announced higher tariffs on $60 billion worth of American goods in retaliation for President Donald Trump’s latest penalties on Chinese products.
Duties of 5 percent to 25 percent will take effect on June 1 on about 5,200 American products, including batteries, spinach and coffee, China’s Finance Ministry said.
Beijing’s move came after the U.S. raised duties this month on $200 billion of Chinese imports to 25 percent, up from 10 percent. In doing so, American officials accused China of backtracking on commitments it made in earlier negotiations. The same day, trade talks between the two countries broke up without an agreement.
Trump also threatened new tariffs on the remaining $300 billion worth of U.S. imports from China, Reuters reported.
The rising trade hostilities could damage the economies of both countries. The tariff increases already in place have disrupted trade in such American products as soybeans and medical equipment and sent shockwaves through other Asian economies that supply Chinese factories.
The highest tariffs announced by China will apply to industrial chemicals, electronic equipment, precision machinery and hundreds of food products.
The Associated Press contributed to this report.