Trump’s Tariffs Will ‘Probably’ Cause Walmart Price Hikes, CFO Says

The top line In a significant warning about the possible inflationary impacts of Trump’s preferred trade policy weapon, a top executive of Walmart, the largest company in the United States by revenue, stated that the strong tariffs pushed by President-elect Donald Trump would probably result in higher costs for consumers.

Important Information
Regarding the effect on his company’s prices of the approximately 10% tax on all imports and 60% tax on Chinese imports supported by Trump, John David Rainey, the chief financial officer of Walmart, told CNBC that “there probably will be cases where prices will go up for consumers.”

In the interview, which was released on Tuesday along with Walmart’s quarterly profits report, Rainey also stated that tariffs “are inflationary for customers.”

The “odds of a 10% across-the-board tariff in 2025 are low,” according to Michael Feroli, the chief U.S. economist at JPMorgan, in a recent not-to-clients letter, so it’s unclear how soon tariffs could be imposed.

An Important Quotation
Regarding the discount retailer’s approach in a tariff environment, Rainey clarified, “We want to work with suppliers and with our own private brand assortment to try to bring down prices because we never want to raise prices.”

Important Background
Given that businesses, like Walmart in this instance, pay the import tax to the US Treasury and frequently pass on the higher input costs related to these fees to customers, Rainey’s remarks allude to the trickle-down effect of tariffs. As Trump develops his economic program for his second term in office, tariffs are a major concern. In September, Trump declared, “Tariffs are the greatest thing ever invented,” indicating his fondness for import tariffs as a foreign policy tool and a stimulant for home industry. Most economists concur that tariffs will raise inflation, which would be detrimental to American consumers at a time when annual inflation has dropped from a four-decade high of almost 9% to a still above-average 2.6%.

Large Value: 0.3 to 0.4. Economists from Goldman Sachs and Bank of America predicted that the tariffs supported by Trump would raise yearly inflation by those percentage points.

Unexpected Information
The richest man in the world and a close Trump advisor, Elon Musk, has been vocal in his opposition to tariffs, saying earlier this month that he is “against sudden giant tariffs.” Another billionaire and GOP megadonor, Ken Griffin, stated on Monday that he is “very anxious about the president’s willingness to engage in tariffs as a matter of trade policy.” One of the leading candidates for Trump’s Treasury Secretary candidacy, Scott Bessent, is among those in the more aggressive tariff sector. He has always disputed the widely held belief that tariffs cause inflation.

Tangent
All of Wall Street’s expectations were exceeded by Walmart’s earnings report on Tuesday: In updated guidance, the company stated that it expects earnings to rise by over 10% to a record high this fiscal year, as its quarterly profit and sales above average analyst projections. In morning trading, the retail behemoth’s stock increased 4% to a record high of around $88 per share.