Donald Trump’s tariffs continue to wreak havoc both on the economy at large as well as on individual’s wallets, as now Walmart is threatening to pass on the cost of the price increases due to the tariffs onto the customers despite the president stating otherwise. This was confirmed by U.S. Treasury Secretary Scott Bessent in an interview with CNN and NBC.
While this is not a surprise to anyone that knows anything about Walmart’s predatory practices towards employees, refusal to pay living wages and ever increasing profit margin that they use to pad their owner’s pockets, the reality is that it has still managed to keep their prices decently low for their customers for decades, which has helped many overlook all the flaws that the company has. But now times have changed and Walmart is not going to eat into their bottom line in order to please anyone or fulfill a promise made by Trump.
However, the current administration seems have seen the writing on the wall, as Bessent even had a phone call on Saturday with Walmart CEO Doug McMillon after Trump warned the nation’s largest retailer not to raise its prices, although the results of the phone call and the president’s warning seem to not have been very encouraging.
Walmart’s stance on the new tariffs
The Trump administration has been firm on their stance that Walmart should “eat the tariff” as Trump himself so eloquently put it on Social Media. Bessent alleged as well that he passed on the same message to McMillon during their call, expecting him to “eat some of the tariffs, just as they did in ’18, ’19 and ’20.”
While both of them seemed satisfied with the results, the blue giant was a lot more diplomatic in their approach, stating that the company has “always worked to keep our prices as low as possible and we won’t stop. […] We’ll keep prices as low as we can for as long as we can given the reality of small retail margins.”
This came after Walmart CFO John David Rainey previously told CNBC that Walmart would absorb some higher costs related to tariffs but the CFO had also told CNBC separately that he was “concerned” consumers would “start seeing higher prices,” pointing to tariffs. As he asserted ” We’re wired to keep prices low, but there’s a limit to what we can bear, or any retailer for that matter.”
While the tariffs seem to have been thought as a measure to force retailers to “shop” local in order to fill their shelves or be penalized (Trump has even stated that it would be the suppliers in the foreign country that supply the imports who would “eat the cost”) the reality is that the United States does not produce enough goods to fill those shelves and even if it could, the price would be astronomically higher and no one could afford to purchase those goods. This is especially true for those who already purchase their food and goods from discount or low price retailers like Walmart or Dollar Tree.
However the administration is not backing down when it comes to Walmart, according to Bessent, the company’s warnings during its earnings presentation in which they painted quite the grim scenario were because they were legally required to present a “pessimistic scenario” to avoid legal action and not because the situation is dire.
Their actions seem to indicate otherwise, as the Trump administration is currently renegotiating tariff rates with approximately 40 countries and is holding a 90-day negotiation with China, during which, as a sign of “good faith” they are temporarily reducing tariffs on Chinese goods from 145% to 30% to allow the talks to continue.