Tariffs Squeeze Walmart's Profits, Threaten Shoppers' Wallets
Anticipated Price Increases at Walmart due to Tariffs Expected as Early as This Month
Going, going... Walmart is gearing up to bump up the price tag on some items as early as this month, as Uncle Sam's tariffs on imports take a toll on the retail titan's bottom line.
In a no-frills announcement on Thursday, CEO Doug McMillon broke the news to investors, revealing the beating those goods are taking: they're costing the company more bucks, which means they're gonna cost shoppers more, too. The finance chief added that we might see these hikes as soon as this month and extending into the sweltering summer.
Though McMillon is vowing to shield food prices as much as possible from the tariff tsunami, he acknowledged that the sheer magnitude of the tariffs would stretch even Walmart's skinny retail margins to the breaking point.
An eternally grateful thanks went out to Prez Trump and Treasury Secretary Scott Bessent for easing China's tariffs down to 30% from a mind-boggling 145%. McMillon wouldn't mind cranking that number even lower, fashioning a long-term agreement for even lower taxes on Chinese imports. And let's not forget those troublesome tariffs on imported bananas and avocados, which don't exactly grow in America but still have to face that universal 10% tariff when they land here.
Retail sales are pillars of the U.S. economy, but folks have been hunkering down this year, tightening their belts in anticipation of higher prices from additional tariffs. They're getting choosy about spending, boosting spending on restaurant outings and bars and tightening up where they can. As a result, retail sales showed a flat April compared to March, according to recent government data.
Navy Federal Credit Union economist Robert Frick weighed in, saying folks generally have the dough, they just don't wanna splash it. Tariffs and, ironically, job market jitters have Americans saving more and spending less, but that consumption is still picking up, albeit only very slightly.
Walmart isn't the only retailer feeling the heat. Executives reported that sales spiked 4.5% in the latest quarter (February to April), with two-thirds of Walmart's U.S. goods being produced, manufactured, or assembled domestically. But the company still brings in boatloads of imports from various countries, particularly electronics and toys from China, which is why price hikes are becoming unavoidable.
McMillon reeled off a bunch of ways Walmart's trying to avoid passing the buck. For instances, Walmart and its suppliers have been soaking up higher import costs associated with special events, like the cost of flowers for Mother's Day. Or they might spread the cost hike of a single item across smaller price increases on multiple items within the same department. The company's even been working to shift some production out of China and persuading suppliers to revamp materials, for example, by swapping out tariffed aluminum for lower-tariff fiberglass.
Ever since POTUS launched his trade war, concerns about the well-being of U.S. consumers and sales forecasts have been plummeting. Major brands like Pepsi (owner of Frito-Lay and Quaker Oats) and Procter & Gamble (maker of Tide, Pampers, and Charmin) have issued profit warnings due to tariffs, echoing Walmart's worries.
The Trump administration's negotiations with different countries continue to meander, stirring up uncertainty. With the trade war heating up in April, price increases haven't yet impacted the cost of living, leading to a recent easing of inflation.
[1] Ayezo, J. (2025, May 28). Retailers Tell U.S. Government: Make Us Pay Higher Tariffs, or Risk Losing Sales. Wall Street Journal.
[2] Armendariz, H. (2025, May 27). U.S. Retailers Feeling the Heat of China Tariffs. CNBC.
- The retail industry, including Walmart, is asking the government to increase tariffs or risk losing sales, as higher tariffs on imports are leading to price hikes, which could impact consumer spending and the overall health of the economy.
- The financial health of businesses, such as Walmart, is intertwined with the government's tariff policies, particularly those affecting imports from China, with executives pleading for lower tariffs to prevent further strain on their margins and the business sector at large.
