Walmart Warns of Price Hikes Due to Tariffs

As a result of Trump’s tariffs Walmart announced its intention to raise prices in the United States starting from June 2019 which will affect all global imports and China-made goods at a 30% rate. CEO Doug McMillon revealed Walmart’s first quarter revenue reached $165.6 billion (up 2.5%) and profits reached $4.4 billion (down 12%) during his Q1 earnings report. The company has no option but to raise its prices because it cannot bear the additional costs despite its domestic sourcing of two-thirds of its merchandise. CFO John David Rainey stated that bananas, avocados and China-made car seats are expected to become more expensive by $100 because of price increases. The remaining tariffs imposed by Trump represent the highest rates since the 1930s which create a significant challenge for Walmart’s pricing strategy. Canada’s Loblaw also warned of price hikes due to retaliatory tariffs. Walmart plans to defend its food prices while modifying its supply chains when customer opposition grows strong to keep achieving profit targets. The US and Canadian economies depend on consumer spending which shows signs of strain because 60% of Americans delay buying things according to a Harris/Guardian survey. The strong first quarter performance of 4.5% same-store sales growth at Walmart did not lead to a short-term profit forecast because of trade volatility yet the company remains optimistic about future challenges.