Walmart’s CEO has risked a White House rebuke by warning that the budget retailer has no choice but to hike its prices because of President Donald Trump’s tariffs.
Doug McMillon said Thursday during an earnings call that the business is feeling the squeeze of Trump’s so-called Liberation Day levies, even after they were reduced.
“We will do our best to keep our prices as low as possible. But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins,” he said, according to CNN.
“The higher tariffs will result in higher prices,” he added unequivocally.
Tariffs on China have hit the prices of electronics and toys. “Maybe the children will have two dolls instead of 30,” Trump said last week when asked if his tariffs might lead to a supply-chain shortage at Christmas.
The U.S. and China had been in a tit-for-tat tariff war since “Liberation Day” in early April. Trump slapped levies of 145 percent on Chinese imports. In retaliation, China imposed a minimum 125 percent tariff on U.S. goods.
The countries have since agreed to a 90-day pause on these duties. The figure has, for now, fallen to 30 percent on Chinese goods, and 10 percent on goods entering the Asian country from the U.S.
Even still, McMillon claims Walmart will still need to raise the prices of some of its products. The company earned $4.45 billion in the quarter which ended on April 30, down from $5.1 billion in the same period last year.
Levies on Costa Rica, Peru and Colombia have hit food costs, McMillon said. His finance chief, John David Rainey, told CNBC Thursday that the price change will become apparent soon.
“I’m concerned that consumer is going to start seeing higher prices. You’ll begin to see that, likely towards the tail end of this month, and then certainly much more in June,” he said.
Tariffs are “still too high,” he complained. “We’re wired for everyday low prices, but the magnitude of these increases is more than any retailer can absorb,” he said.
However, Walmart is “well positioned to manage tariffs” Bank of America analyst Robert Ohmes said this week.
The Federal Reserve, chaired by Trump foe Jerome Powell, reported the real effect on consumers is a 0.3 percent increase in prices this year.
The narrative from Walmart executives could put the company in the White House’s crosshairs. Jeff Bezos felt that wrath last month after Punchbowl News reported that Amazon intended to roll out tariff pricing that showed “how much Trump’s tariffs are adding to the price of each product.”
Bezos quickly walked back after a stern rebuke from the White House, which included Trump’s firebrand press secretary Karoline Leavitt calling the plans “a hostile and political act.”
The post Walmart Warns It’s Hiking Prices Because of Trump’s Tariffs appeared first on The Daily Beast.
