Walmart warns of higher prices from tariffs

Walmart warned Thursday that it will have to raise prices on its products after the Trump administration slapped additional tariffs on goods imported from China. 

“We’re monitoring the tariff discussions and are hopeful that an agreement can be reached,” the retail giant’s chief financial officer, Brett Biggs, told The Associated Press, adding that increased tariffs “will lead to increased prices for our customers.”

{mosads}The comments came after Walmart posted its best sales performance for the first fiscal quarter in nine years, marking 19 straight quarters of same-store sales gains, the AP noted.

Walmart did not specify the scope of the price hikes, but the warning was echoed by Macy’s CEO, Jeff Gennette, who reportedly told investors that prices for both store label and national brands could rise if another round of tariffs are slapped on China. 

Walmart told the AP it is working with manufacturers to alleviate the impact of the tariffs.

President Trump has often claimed that tariffs will benefit America, saying the payments from the levies will “go directly to the Treasury of the U.S.” However, since tariffs are applied on foreign goods purchased in the U.S., the costs often get passed down to U.S consumers when retailers or other importers charge higher prices. 

Many of the nation’s largest retailers have thus far been mostly unaffected by previous rounds of tariffs, which focused largely on industrial and agricultural products. However, the Trump administration announced last week it was implementing 25 percent tariffs on imports like furniture. China is retaliating by slapping levies on $60 billion of U.S. goods. 

The Trump administration is also floating the prospect of extending the 25 percent tariffs to virtually all Chinese imports, adding $300 billion worth of products on top of the $250 billion already being tariffed.

Moody’s analyst Charlie O’Shea told Reuters that the tariffs’ impact on the country’s largest retailer and its customers be blunted since Walmart’s grocery operation, which includes fresh food, contributes about 56 percent to overall revenue. 

“We believe Walmart has the wherewithal both financially and via its vendor relationships to minimize the impact on both itself and its shopping base,” he said. 

However, Walmart’s vendors have already started raising prices, including Del Monte, which supplies fresh and packaged goods to Walmart, including mandarin oranges imported from China.

“It’s not just tariffs. Transportation costs are up, labor costs are up. It’s an inflationary environment,” Del Monte CEO Greg Longstreet told Reuters. “A lot of that’s going to have to be passed on. The consumer is going to have to pay more for a lot of critical goods.”