Walmart in the Face of Isolationism

How can Walmart best position itself to withstand de-globalization trends and government-led shifts toward isolationism?

Historical Context

In recent decades, improvements in technology and global communications allowed for offshoring of services and production of goods that could be delivered over long distances with minimal or no degradation of quality and lower costs. Boundaries between what was a ‘tradable good’ expanded and retail businesses moved production and sourcing offshore. By 2016 97% of apparel and 98% of footwear sold in the U.S. was made overseas1, up from 70% of clothing in the 1980’s2.

To compete with peers on pricing and product assortment, beginning in the 1980s Walmart led a push to look overseas for inexpensive inventory. Today the retail giant imports the majority (~80%) of merchandise it sells to U.S. consumers3.

Today’s Political & Retail Environment

Today political environments are trending towards economic nationalism across the globe. Backlash against freer trade is reshaping politics as significant signs of de-globalization continue to evolve. In this new age, trade flows are restricted, cross-border investment is prohibited and industrial policies that favor domestic firms at the expenses of imports and foreign competition take precedent. Global supply chains, which are inherent in most scale retail businesses, are at risk of actions that may stem from isolationist policies, as exemplified by President Trump’s motto “we will buy American and we will hire American”4.

Walmart’s First Wave of Actions – 2013

Walmart started to implement changes in its strategy in 2013 when the company announced a shift in purchasing behavior to sell $250B worth of American-made products by 2023 to U.S. consumers5. At this time Walmart also announced a round of grants to six universities working on textile innovations to bring back U.S. manufacturing jobs. The company believed these initiatives would lead to the creation of 1M new US jobs (250K in direct manufacturing and 750K in support/services). Management also began hosting an annual U.S. Manufacturing Supplier Summit which included an open call for suppliers to present locally produced products to Walmart, with the goal of supporting American jobs6.

Walmart’s Second Wave of Actions – July 2017

Despite the efforts implemented in 2013, finding U.S. based suppliers “remain[ed] one of the top challenges across [Walmart’s] supplier base”4. In the wake of the Presidential election in the U.S., Walmart’s CEO Doug McMillon committed Walmart to “participating as a leader in the country when it comes to policy…We believe that we should be one of the voices at the table and we want to help renew U.S. manufacturing and drive the creation of manufacturing jobs across the U.S.”

In 2017 Walmart increased its focus on a home-grown supply chain, releasing a “Policy Roadmap to Renew U.S. Manufacturing”7. Decreasing barriers on domestic manufacturing created opportunities for a refocused long-term strategy which identifies four high impact policy barriers that have the potential to accelerate and grow U.S. manufacturing: 1) workforce; (2) coordination and financing; (3) regulation; (4) tax and trade and proposes specific policies. At its core the program, developed in partnership with BCG, strives to “help recapture $300B in production of consumer goods, and create 1.5M U.S. jobs”8.

While there is no single solution that will solve the lack of manufacturing infrastructure in this country, Walmart is leading the retail industry by providing a framework for collaboration among key stakeholders. The Company outlined ten actionable policies (see table below) competitors can adopt to mitigate the four main barriers. The hope is combined efforts of Walmart and peers can reduce long-term unemployment in the U.S., in line with policy trends.

(see PDF page 5 for plan outline here:

Recommended Steps and Potential Questions

While Walmart appears committed to these new business practices, recapturing $250M of products annually is still insignificant compared to its annual U.S. sales of ~$480B. I would challenge management to push the boundaries if increased U.S. manufacturing is a true goal.

Additionally, two of the barriers (regulation and tax/trade policy) show no influence on behalf of retailers. While Walmart may not have direct control over these policies, their involvement on the business and manufacturing councils under the Trump administration is important. I would encourage the company to continue to voice the opinions of manufacturers, retailers and consumers.

On that front, one key question is whether or not revised tax policies such as excise taxes or border tax adjustments on imports would lead to increased prices for U.S. consumers, or if retailers/manufacturers would absorb margin impact? Do U.S. consumers actually have higher willingness to pay for “made in America” products? The effort to rebuild an emaciated manufacturing base in the U.S. is a monstrous effort3 – will such expenditures leave retailers with diminished cash flow and profits, in an already strained retail market?

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  1. Wahba, Phil. “Walmart Touts 10,000 New Jobs as Trump Pressures American Companies.” Fortune, 17 Jan. 2017,
  2. Vatz, Stephanie. “Why America Stopped Making Its Own Clothes.” The Lowdown, 24 May 2013,
  3. “FACT SHEET: Walmart’s Made in America Pledge.” Alliance for American Manufacturer, 27 June 2016,
  4. Bose, Nandita. “Exclusive: Not Made in America – Wal-Mart Looks Overseas.” Reuters, Thomson Reuters, 27 July 2017,
  5. Walmart. Annual Report 2013. “America at Work. Supporting Communities and Growing Jobs”. Retrieved from
  6. “2016 U.S. Manufacturing Supplier Summit.” Newsroom, Walmart Corporate Offices, 28 June 2016,
  7. Walmart. Annual Report 2017. “A Policy Roadmap to Renew U.S. Manufacturing”. Retrieved from
  8. “Walmart Outlines Policy Roadmap to Renew U.S. Manufacturing.” Newsroom, Walmart Corporate Officess, 26 July 2017,



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Student comments on Walmart in the Face of Isolationism

  1. The first thing I thought of after reading this post was the extent to which Walmart sells private label brands. Beyond partnering with universities and other retailers, it seems that Walmart, which operates on a massive scale, could stimulate US manufacturing by investing in plants – either operated by Walmart or third parties — to acquire American-made goods. It seems a little bit like Walmart is operating on the policy level – though grants to universities, policy forums, and announcing measly targets for US-produced goods – while failing to make truly meaningful investments in US manufacturing.

    Either way, while public opinion and free trade pressures are stimulating demand for US manufacturing, I have concerns about whether or not the results will live up to expectations. First of all, in response to your question, it seems that Americans are not all that willing to pay more for “Made in America” [1]. This means that US manufacturers will need to produce goods at low cost, which will be difficult in the US labor environment (hence offshoring in the first place). My guess is that this fact, coupled with improvements and innovations in automation and AI, will lead companies to invest in technology rather than jobs, lead to fewer net new opportunities for low skilled labor than anticipated.

    [1] Timothy Aeppel, “Americans want U.S. goods, but not willing to pay more: Reuters/Ipsos poll” Reuters, 18 July 2017,, accessed November 24, 2017.

  2. The idea of focusing on a “home-grown” supply chain sounds like a great initiative for Walmart–in theory. But Walmart is Walmart because it consistently strives to offer the lowest prices to consumers, day-in and day-out. My biggest concern about focusing on products that are “Made in America” is the impact that it will have on the retail price to consumers. If American supply chains are less efficient or more costly, then Walmart will be forced to pass those costs on to consumers. Assuming that other retailers continue to offer non-American made products, then Walmart will lose no longer be the low cost leader. And, if Walmart loses it’s reputation as a low-cost leader, then it will lose it’s place among American retail giants.

    To your point, it seems like an initiative to recapture $250M of annual products sales relative to the ~$480B in domestic sales is more of a way for the company to play nice with President Trump, rather than anything that will lead to meaningful change.

  3. I found this article especially interesting as it provides an insightful peak into how isolationism is impacting the lower end of the supply chains beyond the U.S. manufacturers that are often singled out for criticism.

    On what Walmart is doing to combat the prevailing changes taking place in its supply chain, I agree that their measures would effectively move some of their products to be made in American and therefore create new jobs in the U.S. However, the real question is how meaningful this can be and how much influence a retail would have on the up-chain manufacturers. Based on the fact that price is the key competitive advantage for Walmart over its global competitors, I believe it is likely that the overall impact of Walmart’s measures would be relatively insignificant and more about sufficing the current trend then enact deep and lasting changes.

  4. To respond to who would incur the effects of a excise or border tax, I believe the answer is the customer. Whenever costs go up for a retailer, due to commodity pricing etc, they markup the product accordingly to maintain their margin. From my retail experience, there is no circumstance (other than a direct pricing war with a competitor) where eroding margins are acceptable. If this tax effects all imports, I believe there will just be a new normal price for certain goods – and previous cost expectations would have to change in the new isolationist landscape. Wal-mart has the benefit of scale and strong bargaining power, so they likely could source much of their products from America for around the same cost due to the benefits for their new suppliers for the incremental sales volume.

  5. I think your post gave a great overview of some of the challenges facing Walmart in terms of potential increasing regulation on imports to the USA and Walmart’s ‘made in America’ response. I especially liked the comparison of Walmart’s $250m commitment vs. its $480bn sales value, showing the true extent of Walmart’s commitment to ‘made in America’.

    To answer your question about whether import duties would result in higher prices for consumers – given the experience of consumers in the UK with the post-Brexit devaluation of the pound (and resulting higher cost of imports), I believe it is likely that a portion of the import duties would flow through to consumers. Walmart has enormous bargaining power with its suppliers (given its enormous scale in the US and internationally) and would likely be able to reach a favorable agreement with many suppliers to reduce cost of imported products, if import duties were put in place. However, Walmart will likely have to bear the cost of some of the import duties, particularly in goods supplied by large suppliers such as Unilever, Nestle, Proctor & Gamble, etc. Walmart’s customers are generally price sensitive and therefore Walmart needs to ensure its prices remain low vs. competitors. It will therefore only pass on a small portion of its increased cost of goods to its customers, and the balance would impact is profit margins.

    To answer the question about whether US consumers are more likely to pay higher prices for ‘made in America’ – my opinion (not backed by any data) is ‘no – or at least not willing to pay a price that will be required to support American-made across most products’. If US consumers were willing to pay a premium for US-made products, then there would not be any outsourcing in the first place. In my opinion, for US manufacturing to be competitive, it will have to rely on reducing production costs, not on hoping that US consumers will pay more just because a product is made in the USA.

  6. One quick heads up – you noted “While Walmart appears committed to these new business practices, recapturing $250M of products annually is still insignificant compared to its annual U.S. sales of ~$480B.”, which as several other commentators pointed out, is a very powerful statement. However, per this source [1], Walmart is making a $250 BILLION commitment to US manufacturing, not $250 million. This is more than half of their revenue – a big commitment indeed! I think this really strengthens your overall argument about Walmart’s commitment to US manufacturing!

    I also wonder, from a corporate social responsibility perspective, what are Walmart’s obligations to create domestic manufacturing jobs. For instance, Walmart is already the largest employer in the US, with more than 22 million US employees, and indeed is the largest employer in 23 states [2]. Why is 22 million retail jobs not enough – why are the also obliged to create a further million manufacturing and related jobs as well?


    1. I made a mistake- what I meant to say was $25B, not $250M – not sure how I didn’t catch that- thank you for the heads up! Point being that their $250B is an aggregate total spanning 10 years (2013 – 2023). So for me, the point still stands that $25B per year is ~5% of sales annually is still low penetration.

  7. Thanks for this, PolkaDots. As I read this, what struck me most was the point you raised that while Walmart is investing in reinvigorating America’s manufacturing industry, consumers may not have an appetite to pay a premium for American made goods. In fact, the data does not look positive. For instance, an Ipsos poll from June 2017 shows that while 69% of survey respondents believe total price is “Very important” in their decision to purchase, whether a product is made in America is rated similarly by only 32% of survey respondents [1].

    Walmart is surely aware of this challenging dynamic. Are the company’s efforts to improve American manufacturing merely a hedge against potential regulatory changes, including excise taxes and restrictions on global trade, rather than a genuine investment in American manufacturing capability? Walmart notes that domestic production can be more efficient through reduced turnaround times [2]. But given how streamlined Walmart’s processes already are, what else does the company have to gain from a greater focus on domestic production, and can it possibly offset the greater costs?



  8. This is an interesting discussion, PolkaDots. In a way, isolationism may not all that bad for Walmart given that manufacturing costs in China are also increasing. Given that quality of life in China and other developing markets is improving, and that labor cost in those countries are also increasing, rising COGS may be a reality for Walmart even without isolationist policies. In a way, these policies may force Walmart to prepare ahead of other international competitors, and actually be a source of advantage in the future. Also, in many locales, Walmart is the only game in town when it comes to specific goods; so their core customer base may shrink with rising prices but not as much as we might initially think.

  9. Regulation and policy play a critical role in constraining the global trade. It helps the government protect the local business but hurt the customer’s business. When Walmart ends the business with international suppliers, the consumers no longer get access to cheap products of reasonable quality. End consumers are paying the cost of isolationism!

    The benefits of global supply chain is to manufacture and source the product from a place where the cost is lowest. Creating such isolationism, in short term, will help increase the domestic business. However, in the long run, it cannot optimize the value chain.

    Walmart, as a global retailer, attracts customers for the diverse products at a lowest price. I think the isolation will make Walmart lose the advantage of lower prices. At some point in the future, the trend of isolation is likely to break.

  10. This article highlights how Walmart is both powerful and powerless as a major retailer in the United States. While it has incredible buying power throughout the world and the ability to drive down costs across its supply chain, as a retailer who counts every penny, it will be greatly hindered if isolationist trade policies take effect in a major way in the US.

    The biggest issue here is the mismatch between what the consumer hypothetically wants (made in America) and what they actually want (affordable goods). In my opinion, there is no way for Walmart to compete on price as well as production location. It must hunt for the most competitive pricing possible in order to maintain its razor thin margins. Moreover, consumers are not willing to pay a premium for goods ‘Made In America,’ and will ultimately default to the lowest cost provider [1].

    Though isolationist trade policies would affect the entire retail industry, it is Walmart whose customer promise is “everyday low prices” and without the ability to deliver that, they will likely face major headwinds. This will likely be amplified by Amazon, who is able to provide comparable prices as well as the added benefit of fast delivery directly to the consumer’s door.


  11. PolkaDots, you are raising a very interesting point: what’s the impact on the customer? My first reaction is that Walmart may incur in a misalignment between its customer promise and its operations. On the one side, customers shopping at Walmart are looking for affordable prices, while on the other side, “Made in the USA” products need costly operations to be manufactured. I can hardly see how these two can be reconciled, at least in the short term, with manufacturing and labor costs still being considerably higher in the States compared to developing countries. One way, given also the size of Walmart and its economic relevance at a national level, may be to lobby to introduce programs that subsidize local production, and therefore decrease Walmart’s costs – and ultimately consumers’ prices.

    Speaking of Walmart’s effort to promote local products so far, the company is also facing a new challenge: better control its supply chain. Many of its products labeled “Made in the USA” did not in fact adhere to the requirements (i.e. not all components were manufactured and assembled in the United States), attracting not only bad publicity but also an investigation of the Federal Trade Commission.[1]
    If Walmart wants to be 100% American, it needs to do a better job at enforcing rigorous standards, not only with its direct vendors, but also with its suppliers’ suppliers.

    [1] Forbes, “Walmart’s Made In The USA Claim: Fact Or Fiction?,” June 2016.

  12. Your article does a really good job of outlining the impact of isolationism for Walmart. What called my attention was that the big commitment that Walmart management made on the first wave was done in 2013, in a time Trump was not there yet. This means the current Trump government was not the motivation to focus on products made in America. Rather this is a Walmart internal motivation to create jobs in the U.S.A. What I think could be better explored in your article is a more detailed explanation of why management is doing this push and the implications of it in its business.

    “There is only one boss-the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” -Sam Walton, founder of Walmart.

    If the customer is the boss, did management asked customers before making this huge strategic shift towards made in America products? What is the role of Walmart in the U.S.A. society? And if the jobs they create with this shift is replaced by machine and robots in the next decade?

  13. I am very interested in your question, “Do U.S. consumers actually have higher willingness to pay for ‘made in America’ products?” As the public and private sector come together to ensure business stays within the borders of the U.S., are the public and private sector designing the right incentives for citizens to want to buy those goods? Economists have shown us that through comparative advantage, there is value in trade. When trade occurs, labor will shift to where it can be employed with the most efficiency. In follow up to this article, I think it would make sense to also understand how the increased volume of goods creation in the US can be leveraged to improve efficiency and ultimately offset costs that were ignored by purchasing elsewhere. Walmart’s digitization efforts may be just the recipe for the company to support doing more business at home at equal margins.

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