Walmart is working with suppliers to manage pricing after the Trump administration hiked Section 301 tariffs to 25 percent last week on $200 billion worth of Chinese goods (see 1905090018), said Chief Financial Officer Brett Biggs on a fiscal Q1 earnings call Thursday. Increased tariffs “will increase prices for customers,” said Biggs. With the administration's threat Monday to impose 25 percent tariffs on Chinese imports not previously dutied in the Section 301 investigation (see 1905140025), Walmart will monitor any upcoming U.S.-China trade talks, and is “hopeful that an agreement can be reached” to avert imposition of the fourth tranche of tariffs, said Biggs. Walmart's goal “is to always be the low-priced leader, and we will actively manage pricing and margins as warranted with our customers and shareholders in mind.” Walmart's supply-chain teams are focused on “executing appropriate mitigation strategies,” including possibly sourcing goods from alternative countries of origin, he said. In Q1, Walmart revenues rose 1 percent vs. a year ago to $123.9 billion, tempered by currency headwinds, the company said. Walmart U.S. Q1 revenues were $80.38 billion. Traffic in U.S. stores, now called transactions, rose 1.1 percent, Walmart said, while Q1 tickets grew 2.3 percent over the year-ago quarter. E-commerce sales were “robust,” at 37 percent growth, and contributed 140 basis points to the U.S. segment’s comp sales increase, said Biggs. From Q1 forward, Walmart is including e-commerce transactions that were previously reported in the “ticket” category as “comp transactions,” Biggs said, encompassing in-store, clubs and e-commerce businesses. CE products weren't referenced among categories highlighted for contributing to Walmart U.S.’ 3.4 percent comparative sales bump in Q1, but toys and “wireless” were highlighted in the company’s earnings presentation. The company also credited momentum in food and consumables, pharmacy sales that benefited from “branded drug inflation,” Easter, home and lawn, and garden sales for its “highest Q1 comp in nine years.” In the quarter, the company announced new goals to support recycling in its private brands packaging in Walmart U.S., Canada and Mexico, as part of broader plastic waste reduction goals, said CEO Doug McMillon. Goals include making private brand packaging 100 percent recyclable, reusable or industrially compostable by 2025, to have 20 percent recycled content in its packaging, and making it easier for customers to recycle by including “customer-friendly” labeling on product packaging; Walmart is challenging branded suppliers to set similar targets, he said.

Smartphones are the largest of eight classifications of consumer tech products that would bear the biggest brunt of the 25 percent Section 301 tariffs proposed Monday on $300 billion in imports not previously dutied during the U.S.-China trade war (see 1905130066), CTA’s top trade strategist told us Tuesday. “The import values of the products that hit our members are massive,” emailed Vice President-International Trade Sage Chandler.

President Donald Trump’s administration making good at 12:01 a.m. Friday on his threat to hike the 10 percent tariffs on $200 billion in Chinese goods to 25 percent drew tech concern. “Raising tariff rates or imposing new tariffs on American families is not a winning negotiating tactic" with the Chinese, said CTA Friday. The tariff hike will raise the “significant toll” the trade war already has taken on U.S. businesses, workers, and consumers,” said Naomi Wilson, Information Technology Industry Council senior policy director-Asia. GoPro meanwhile remains "on track" to begin "ramping" up" U.S.-bound" action-camera production this quarter in Guadalajara, Mexico, as a proactive hedge against possible future tariffs on Chinese goods, said Chief Financial Officer Brian McGee on a Q1 call Thursday evening. GoPro has no current exposure to the three rounds of tariffs imposed since July but wanted protection anyway against new duties, he said. Guadalajara's production ramp will "support" U.S. sales beginning in Q3, said McGee. "We expect most of our U.S.-bound cameras will be in production in Mexico in the second half of 2019." GoPro's decision to shift production of most cameras destined for U.S. import from China to Mexico "supports our goal to insulate us against possible tariffs, as well as recognize some cost-saving and efficiencies," he said. The company says it's keeping production of non-U.S. cameras in China because it's an important strategic hub and the Chinese consumer market loves the product.

GoPro remains "on track" to begin "ramping" its "U.S.-bound" action-camera production this quarter in Guadalajara, Mexico, as a proactive hedge against possible future Section 301 tariffs on Chinese goods, said Chief Financial Officer Brian McGee on a Q1 call Thursday evening. GoPro has no current exposure to the three rounds of tariffs imposed since July but wanted protection anyway against new duties, he said.

GoPro remains "on track" to begin "ramping" its "U.S.-bound" action-camera production this quarter in Guadalajara, Mexico, as a proactive hedge against possible future Section 301 tariffs on Chinese goods, said Chief Financial Officer Brian McGee on a Q1 call Thursday evening. GoPro has no current exposure to the three rounds of tariffs imposed since July but wanted protection anyway against new duties, he said.

Sharp Home Electronics, the U.S. sales and marketing subsidiary, based in New Jersey, of Japan-based parent Sharp, is targeting September for a return to the U.S. market for Sharp-built and branded TVs, Peter Weedfald, senior vice president-sales and brand marketing, told us Friday. Weedfald outlined those plans following Sharp's crisp 62-word announcement Wednesday of a new partnership with Hisense.

Headset supplier Poly, which includes Plantronics, wants to exit the consumer business to stay “laser-focused” on its enterprise opportunity, said CEO Joseph Burton on a call Tuesday about the quarter ended March 31. It’s in the “very early days of thinking this through,” he said. Whether it sells the business in “a single transaction to a single buyer” or through “multiple transactions” or finds a joint venture partner, “all that's a little bit still in front of us,” he said. Consumer is roughly 8 percent of total revenue, he said. Poly is watching this week’s tariffs situation “like a hawk,” and is “uniquely positioned ... versus some of our competitors” to weather the storm if the third tranche of Chinese duties rise to 25 percent (see 1905080033), said Burton. It builds a “considerable number” of its products “in-house” in a factory it owns in Tijuana, Mexico, he said.

Headset supplier Poly, which includes Plantronics, will exit the consumer business to stay “laser-focused” on its enterprise opportunity, said CEO Joseph Burton on a Q1 earnings call Tuesday. Poly is in the “very early days of thinking this through,” he said. Whether it sells the business in “a single transaction to a single buyer” or through “multiple transactions” or finds a joint venture partner, “all that's a little bit still in front of us,” he said. Consumer is roughly 8 percent of total revenue, he said. The higher-end Voyager headset product line isn't for sale “at this time,” he said. Though they’re sold through retail, “they're really predominantly business headsets,” so “we really consider it part of enterprise,” he said. Poly is watching this week’s tariffs situation “like a hawk,” and is “uniquely positioned out there versus some of our competitors” to weather the storm if the Section 301 duties rise to 25 percent on Chinese imports, said Burton. Poly builds a “considerable number” of its products “in-house” in a factory it owns in Tijuana, Mexico, he said. It does have some products manufactured in China that would have tariff exposure, but “there's a third group of products where we have an additional set of contract manufacturers,” he said. “Our ability to rapidly move products between those three really gives us a competitive advantage that we think very few people have.” Depending on what happens, “we will lift and shift ahead of our competition,” he said. “We scenario-plan this every day based on the latest thinking,” but it’s “impossible to know” for now how much of a hit tariffs will bring to gross margin, he said.

Some firms have moved contract production out of China, even though the items they import were only subject to a 10 percent tariff, according to Meredith DeMent, a senior associate in the international commercial practice at Baker McKenzie. DeMent said she personally has seen more than 10 companies move at least some production to other countries. But, she said, many were thinking that their goods might return to Most Favored Nation tariff levels soon, because news reports suggested the U.S. and China were headed toward a deal that would at least have "a phased scaling back of the tariffs."

Even as it described the cloudy outlook for the new NAFTA's ratification, a new report from the American Council for Capital Formation's Center for Policy Research says policy makers should ratify the agreement, and not move toward a withdrawal from NAFTA.