After Walmart CEO Doug McMillon warned that prices could rise due to tariffs, US President Donald Trump over the weekend criticized Walmart and said the company should “eat the tariffs” rather than raise prices, the Washington Post reported on Saturday.
Despite a recent US-China trade agreement to lower tariffs, the remaining US tariff rate on Chinese goods is still significant and continues to inflict harm on American businesses and consumers, as evidenced by a growing number of US companies raising prices, a Chinese expert said.
The Walmart CEO said earlier this week that some prices could rise within weeks because of the tariffs imposed by the Trump administration. The US president responded Saturday, posting on his social media platform Truth Social that Walmart should “EAT THE TARIFFS” and “not charge valued customers ANYTHING,” according to the Washington Post.
Bearing the brunt
Walmart, which sells a broad selection of affordable goods to millions of Americans, said on Thursday the tariffs, even at their recently reduced levels, would soon force it to start raising prices. “We will do our best to keep our prices as low as possible,” McMillon, said on a call with analysts. But he cautioned that the company would not be able to “absorb all the pressure” imposed by the tariffs, the New York Times reported.
Tariffs on imports from countries such as Costa Rica, Peru and Colombia have already made bananas, avocados, coffee and roses pricier, McMillon said. He also said that high tariffs on goods from China, especially those impacting electronics and toys, pose the biggest price threat, according to the Washington Post.
Walmart boasts upward of 4,000 stores in the US and says it counts 90 percent of Americans as its customers, according to the Washington Post.
In an interview with CNBC on May 15, Walmart Chief Financial Officer John David Rainey also said tariffs are “still too high” – even with the recently announced agreement to lower duties on imports from China to 30 percent for 90 days.
“We’re wired for everyday low prices, but the magnitude of these increases is more than any retailer can absorb,” Rainey said.
Walmart earned $4.4 billion in the quarter ended April 30, down from $5.1 billion in the year-ago period. Revenue rose 2.5 percent to $165.6 billion, just short of analyst estimates, CBS News reported.
This latest move by the US retail giant to raise prices once again highlights the persistent pressure and uncertainty facing American businesses amid the tariffs, Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Sunday.
Moreover, Zhou said forcing Walmart to lower prices not only interferes with the normal operations of businesses and market-based pricing, but it could also undermine their supply capacity, ultimately affecting jobs and incomes.
Gao Lingyun, a researcher at the Chinese Academy of Social Sciences in Beijing, told the Global Times on Sunday that tariffs act as a cascading cost-transfer mechanism. Initially, importers like Walmart bear the initial impact, but in the end, consumers absorb the increased prices. “It highlights that despite the previous trade agreements between China and the US, the 30 percent tariff rate remains exorbitantly high, exposing US companies to continued disruptions and harmful impacts,” Gao said.
“The 30 percent tariff from China is better than 145 percent, but is still very significant. The tariffs will certainly lead to higher prices for consumers and reduced demand for goods due to the resulting higher retail price,” Steve Greenspon, CEO of Honey-Can-Do International, a leading USA-based provider of home storage, organization and laundry care products sold through retailers, told the Global Times in a recent interview.
Wider impact
The Trump administration temporarily reduced tariffs on China, but import taxes have already made baby gear, power drills, mattresses and other everyday products more expensive for Americans, the CNN reported on May 13.
Walmart is by no means the only US business forced to raise prices due to US tariff policies.
Don’t be surprised if your cart seems more expensive than usual the next time you shop – brands and retailers are raising prices on products across categories due to tariffs, NBC News reported on Saturday, referring to the remaining tariffs between China and the US.
The report listed over a dozen of US-based companies that have either raised prices or may have to do so amid the tariffs including home appliance provider Windmill and fashion company Fabletics.
Other well-known brands have also signaled that the White House’s tariff campaign could increase prices, disrupt supply chains and frustrate already beleaguered consumers dealing with inflation. Adidas and McDonald’s, among others, have indicated the trade war could affect their businesses, according to the Washington Post.
The US consumer sentiment continued to decline in May as Americans’ expectations about future inflation rose and concerns persisted about the effect of the US tariffs, Fox Business reported, citing a recent finding of the Consumer Sentiment Index released by the University of Michigan Surveys of Consumers, which shows that Consumer Sentiment Index dropped to 50.8 in a preliminary reading in May after a final reading of 52.2 in April. Economists polled by Reuters had projected the index would rise to 53.4.
Moreover, Moody’s cut America’s pristine sovereign credit rating by one notch on Friday, the last of the major ratings agencies to downgrade the country, citing concerns about the nation’s growing $36 trillion debt pile, Reuters reported.
“Tariffs are unsustainable. The current 30 percent tariff rate remains extremely high for businesses. As long as the tariff issue remains unresolved, both businesses and consumers will have to bear the financial strain,” Gao said.
