Walmart, the world’s largest retailer, will need to start raising prices later this month due to the high tariff costs. Executives warned with clear signal that President Donald Trump’s trade war was filtered into the US economy.
In a positive positive for US consumer health, Walmart’s explicit statement on Thursday is also a sign of how the trade war is affecting businesses. This is because Walmart is attracting attention for its ability to actively manage costs rather than keeping prices low.
Walmart stock fell 2.3% in morning trading after refusing to provide second-quarter profit forecasts, even if the company’s US equivalent sales exceeded expectations in the first quarter.
Net sales increased 2.5% to $165.6 billion, estimated shy, with sales at the same store increasing by 4.5%. Walmart’s quarterly adjusted earnings were 61 cents per share, with analysts’ consensus being 58 cents per share.
Many US companies have reduced or elicited year-round expectations as consumers grow their budgets and buy everything from food to essentials at cheaper prices, resulting in the trade war. But Walmart’s statement resonates nationwide, with around 255 million people shopping around the world in stores and online, with 90% of the US population living within 10 miles of Walmart.
Prices began to rise at the end of May, and certainly in June, Walmart’s chief financial officer, John David Rainey, said in an interview with CNBC. In a post-revenue call with analysts, he said retailers should cut orders considering price resilience.
As the largest importer of container goods in the United States, Walmart is heavily exposed to customs duties, with the US and China reaching an armistice that reduced the taxation on Chinese products to 30%, but that is still a cost that could bear.
“We are very pleased and grateful for the progress made by the administration to defeat tariffs…but let us emphasize that we still think it’s too expensive,” Rainey said over the phone.
“There are certain items, certain categories of products that we rely on to import from other countries, and their prices are likely to rise, which is not good for consumers,” he added.
Other retailers also said they would raise prices. German sandal maker Birkenstock said Thursday that it plans to raise prices globally to completely offset the 10% impact of US tariffs on goods created in the European Union.
US consumer sentiment fell for the fourth consecutive month in April, while GDP signed its first three years in the first quarter, inciting concerns about a recession.
Narrow margin
Walmart CEO Doug McMillon said retailers cannot absorb all the tariff costs due to narrow retail margins, but they have committed to ensuring that tariff-related costs for common goods that come primarily from China will not raise food prices.
To mitigate the impact, Walmart has worked with suppliers to replace tariff-affected components, such as replacing them with tariff-free glass fiber.
Despite these efforts, MacMillon noted that cost adjustments are more difficult when importing groceries such as bananas, avocados, coffee and roses from countries such as Costa Rica, Peru and Colombia.
Analysts said Walmart is in a better position than its rivals. Its size can be reliant on suppliers, reducing efficiency and protecting customers from customs duties.
“There will be destruction of demand from tariffs. A complete shipwreck is unlikely,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Walmart on Thursday maintained its forecast for annual revenue and profits for fiscal year 2026, but operating income growth and earnings per share for the second quarter cites a “fluid operating environment.”