


If America’s largest retailer is unable to outrun the impact of tariffs, what chance do smaller outfits have?
A few days ago, Noah Rothman reported on comments made by Walmart’s CFO, John Rainey, to the effect that price rises were upon us, with worse to come. The retailer (and others) had tried to maneuver its way round the tariff effect, but that can only go so far.
Among Rainey’s comments:
The magnitude and speed at which these prices are coming to us is somewhat unprecedented in history.
Walmart is America’s largest retailer, and if it is unable to outrun the impact of tariffs, what chance do smaller outfits have?
Rothman:
Walmart isn’t the only retailer raising consumer prices to match increased operating costs. Some of them even have the gall to properly inform their customers about the conditions that have compelled them to increase prices — acts of radical transparency White House Press Secretary Karoline Leavitt deemed “a hostile and political act” last month. The truth hurts, and no amount of hectoring from the lectern in the James Brady Briefing Room will repel market forces.
No, they will not.
But the central planner in chief appears to think otherwise.
The president posted this message to Truth Social:
Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain. Walmart made BILLIONS OF DOLLARS last year, far more than expected. Between Walmart and China they should, as is said, “EAT THE TARIFFS,” and not charge valued customers ANYTHING. I’ll be watching, and so will your customers!!!
Why Walmart, an American company that employs 1.6 million people in the U.S., should “eat the tariffs” other than to cover up the cost to Americans of this administration’s tariff strategy escapes me. And, as I wrote at the time that Karoline Leavitt was complaining about reports that Amazon should spell out the cost of tariffs on its receipts, this evasiveness is odd:
The administration has repeatedly assured Americans that its tariffs are a key element in bringing about the country’s coming golden age. If Amazon were to do this (it seems that they are not) it would highlight the sacrifices made by American consumers chipping in to pay the tariffs that are going to bring this country so much prosperity. They deserve the recognition.
Alternatively, such labeling could be seen as providing a warning label encouraging American customers to buy American goods. What could be more patriotic than that? Americans will doubtless get the message and reject those suddenly expensive children’s shoes, strollers, and the like. And when American-made substitutes are not currently available at a good price, American companies will surely take advantage of the opportunity this represents by filling the gap, and do so before American shelves start to empty.
Donald Trump should be proud that Walmart is passing on the cost of these tariffs, and prouder still that Walmart is making clear where responsibility for these price rises lies. America will be grateful!
Walmart, which reported a net profit margin of a shocking (#irony) 2.5 percent in 2024, and prides itself on its price competitiveness, is unlikely to pass on the tariff increases unless it “has” to. In the end, however, Walmart has to run its business in the interest of its shareholders, the people who, you know, own the company. One of the (many) objections to ESG and stakeholder capitalism was the way that those two ideas represented a partial expropriation of shareholders’ rights. The same is true of political bullying intended to persuade a company to adopt a suboptimal pricing strategy. It’s also an attempt by the administration to persuade private companies to (effectively) subsidize its policies — on top, that is, of the taxes they already pay.
The president’s comments borrow from the Biden-Warren playbook. Standing behind them are implicit threats of investigations by one federal agency or another, just as there were during the worst of Bidenflation. If Walmart is intimidated by Trump’s threats, that will set a bad precedent. It will also discourage investment in the U.S. The administration argues that businesses will invest more in the U.S. to avoid tariffs. And some are and will continue to do so. Others might decide that investing in a country where the executive becomes so involved in corporate decision-making might call for a little caution.
And if Walmart crumbles and accedes to the president’s wishes, its profits will be less that they might otherwise have been. That means less money to invest, less money to hire, less money to pay its investors.
Among the luxuries on which tariff costs are being passed are . . . bananas. According to Rainey, reports the Wall Street Journal, tariffs have increased the price of bananas, one of the most frequently purchased items at Walmart, from 50 cents a pound to 54 cents.
Just another luxury, I suppose, like pencils and dolls.