Key Takeaways
- Walmart’s CFO stated that prices on certain items might rise due to proposed tariffs.
- Walmart and Lowe’s expressed concerns about the potential impact of tariffs.
- Walmart has diversified its supply chain to mitigate the impact of previous tariffs.
Walmart’s CFO, John David Rainey, stated that the company might need to raise prices on certain items if President-elect Donald Trump’s proposed tariffs are implemented. Rainey’s remarks came as Walmart, the largest U.S. retailer, exceeded Wall Street’s earnings and sales expectations and raised its full-year forecast. Similarly, Lowe’s also addressed the potential risks of the tariff proposal during its earnings report on Tuesday.
The comments from Walmart and Lowe’s add to growing concerns from U.S. retail leaders about the potential impact of the tariffs. During his presidential campaign, Trump proposed imposing tariffs of 10% to 20% on all imports, with rates as high as 60% to 100% on goods from China.
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Rainey noted that it is still too early to determine which specific products might see price increases as a result of the proposed tariffs. “We never want to raise prices,” he told CNBC. “Our model is everyday low prices. But there probably will be cases where prices will go up for consumers.” According to the Walmart CFO, most of its merchandise is not at risk of being affected by tariffs, as approximately two-thirds of the products the retailer sells are made, grown, or assembled in the United States. “We’ve been living under a tariff environment for seven years, so we’re pretty familiar with that,” he said. “Tariffs, though, are inflationary for customers, so we want to work with suppliers and with our own private brand assortment to try to bring down prices.”
Walmart Considers Price Hikes Amid Proposed Trump Tariffs
Rainey also noted that, like many other companies, Walmart has worked to diversify its supply chain by sourcing goods from various regions instead of relying heavily on China or any single country, adding that the tariffs imposed during Trump’s first term had already prompted the company to make significant adjustments.
Other retailers and brands have voiced concerns over the potential challenges posed by the proposed tariffs. E.l.f. Beauty CEO Tarang Amin recently stated in an interview with CNBC that the company might have to increase prices if the higher duties go into effect. Similarly, footwear brand Steve Madden revealed plans to cut its imports from China by up to 45% over the next year in an effort to minimize the financial impact.
During an earnings call, Lowe’s CFO Brandon Sink revealed that approximately 40% of the company’s cost of goods sold comes from international sources, including direct imports and merchandise from national brands. He acknowledged that tariffs “certainly would add product costs,” but added, “timing and details remain uncertain at this point.”
The possibility of rising prices comes at a time when inflation in the U.S. has eased, following years of putting financial pressure on consumers. In October 2024, the Consumer Price Index (CPI) increased by 2.6% year-over-year, slightly up from 2.4% in September, marking the first annual inflation rise in seven months. Despite this recent uptick, inflation remains well below the 9.1% peak seen in 2022. The Federal Reserve is expected to proceed with planned rate cuts in December to maintain inflation near its 2% target.