In a recent social media flurry, President Trump directed his verbal critique towards Walmart, alongside music icons Bruce Springsteen and Taylor Swift. The president's ire was sparked by Walmart's indication of impending price hikes due to tariffs, set to take effect later this month. Despite Walmart's assertion of maintaining low prices amidst thin retail margins, the president insists that Walmart should absorb these tariffs without passing costs to customers.
On Saturday, President Trump criticized Walmart executives via Truth Social for attributing potential price increases to tariffs. He emphasized that Walmart, having made billions last year, should shoulder the tariff burden rather than pass it on to consumers. In response, a Walmart spokesperson reiterated their commitment to keeping prices as low as possible, given the realities of retail economics.
This tension stems from discussions held in late April between President Trump and various CEOs, including Walmart’s Doug McMillon, regarding tariff impacts. Sources indicate Walmart advocated for the complete removal of Chinese tariffs, highlighting significant implications for general merchandise pricing such as furniture and toys.
Amidst these developments, the Trump administration and China agreed to reduce tariffs for 90 days. Presently, the U.S. tariff rate on China stands at 30%, significantly lower than the peak of 145%. According to Walmart CFO John David Rainey, cost increases on certain imported items exceed what retailers or suppliers can manage, inevitably leading to price hikes noticeable later this month. Items most affected include baby strollers, furniture, and toys, impacting suppliers like Newell Brands.
Despite these challenges, Walmart's first-quarter financials were mixed. Sales increased by 2.5% year-over-year to $165.6 billion, slightly below expectations. Adjusted earnings per share rose 1.7% to $0.61, surpassing forecasts. However, transaction growth weakened compared to previous trends, and the company's full-year earnings outlook remains cautious.
As economic uncertainties persist, Walmart faces the dual challenge of managing tariffs and maintaining customer satisfaction. Should tariff rates revert to higher levels, the company anticipates difficulties in growing earnings, potentially affecting its holiday season strategies based on back-to-school shopping outcomes. Thus, navigating these complexities requires strategic foresight and adaptability.