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Walmart Says It Can’t Absorb All the Tariff Costs
“Our aim is to maintain competitive prices,” stated CEO Doug McMillon. Acknowledging the significant impact of tariffs, he explained that despite recent reductions, absorbing all the added costs is challenging given the slim profit margins in retail.
Shoppers Will See Increases Starting in Late May
CFO John David Rainey underscored the impending effects of tariffs, noting that certain imported goods crucial for their product offerings will likely see price hikes. This, he emphasized, spells trouble for consumers.
Walmart Is Shifting Production and Materials
McMillon added that the company is proactive in diversifying production locations as part of long-standing preparedness for such disruptions. Additionally, efforts with suppliers to find tariff-free alternatives, like substituting aluminum with fiberglass, are underway.
Food Prices Could Be Affected by Non-China Tariffs
Walmart says it is prioritizing food affordability, but pressure is mounting. “We won’t let tariff-related cost pressure on some general merchandise items put pressure on food prices,” McMillon said. “But tariffs on countries like Costa Rica, Peru, and Colombia are pressuring imported items.”
Expect Price Volatility Throughout the Year
“The level and speed at which tariff-impacted prices could go up is more extreme than in normal periods,” Rainey said. Walmart is maintaining its full-year outlook, but executives cautioned that trade negotiations and inventory timing could lead to price swings.
Walmart Still Projects Strength Despite Headwinds
“We think we can navigate this as well or better than anyone,” McMillon said. “But even at the reduced levels, the higher tariffs will result in higher prices.”
