Walmart is telling customers that prices on some items in its stores could increase if President-elect Donald Trump’s plan to raise tariffs goes into effect.
The warning came on the back of the company’s third-quarter earnings results, in which the retail giant posted 5.5 percent revenue growth, along with a 27 percent increase in global e-commerce sales.
“We never want to raise prices,” Walmart CFO John David Rainey said during Tuesday’s earnings call. “Our model is low prices every day. But there will likely be cases where prices for consumers rise.”
Rainey said it was too early to determine which products might be particularly affected.
Although, experts said ABC News that electronics, clothing and toys are likely to become the most expensive under an environment of higher tariffs as most of these items are imported.
Rainey said about two-thirds of the items the big-box retailer sells are made, grown or assembled in the United States.
That means all of these goods would not be subject to the Trump tariffs, which many economists say will reignite inflation.
Walmart has warned customers that prices at its stores could rise thanks to Trump’s new pricing plan
During his first term, Trump also imposed tariffs, although these started on a much smaller scale than what he is now proposing.
In January 2018, he ordered tariffs on imported washing machines and solar panels.
Months later, he did the same with steel and aluminum, but left an exception for Canadian and Mexican imports.
Trump specifically escalated the trade war with China in August 2019 when he announced he would impose a 10 percent tariff on $300 billion of Chinese-made products.
President Joe Biden maintained these tariffs throughout his term and decided to raise some of the tariffs on $15 billion of Chinese imports. CNN September reported.
In this trading environment, retailers like Walmart have already tried to diversify where they import goods, Rainey told investors.
“We’ve been living under a tariff environment for seven years, so we’re pretty familiar with that,” he said. ‘However, rates are inflationary for customers, so we want to work with suppliers and with our own private label range to try to bring prices down.’
But what Trump is putting forward now is starkly different from what he and Biden oversaw during their respective presidencies.
Both President-elect Donald Trump and current President Joe Biden have overseen a regime of tariffs for the past seven years
Trump is proposing a 60 percent tariff on all Chinese goods, and a 10 percent tariff on all US imports worth $3 trillion.
A May report from the Peterson Institute for International Economics, a nonpartisan think tank, estimated that these tariffs will cost middle-class families at least $1,700 a year.
Trump’s aggressive trade proposals would cost consumers at least $500 billion a year — or at least 1.8 percent of GDP, according to the institute.
That’s roughly five times the cost of the US-China trade war that Trump started in 2018.
Retail expert Neil Saunders, managing director of GlobalData, told DailyMail.com that Trump’s tariff proposals would cause “huge headaches” and impose significant additional costs on the retail industry.
“Despite Trump’s claims to the contrary, the tariffs are paid by the companies or entities importing goods and not by the countries themselves,” he said.
‘This means that the cost of buying products from abroad, either directly or as inputs to production, would rise sharply.’
Tariffs could also spur inflation again, according to liberal economist Larry Summers.
“There is a very substantial risk that the president will try to implement what he talked about. If he does, the consequences will likely be significantly greater inflation than what was wrought by the excessive Biden stimulus,” Summers said.
This comes at a time when the Federal Reserve is in the midst of a policy shift on interest rates.
Liberal economist Larry Summers warned that inflation is still not set in stone and that the next Trump administration could make matters worse
After keeping the Fed rate at 5.25 to 5.5 percent between July 2023 and September 2024 to keep inflation low, the Fed has made two cuts since September.
The most recent cut of 25 basis points brought interest rates down 4.5 percent and 4.75 percent.
Summers called this both an “astonishing” and a “huge” mistake, similar to when the Fed was late in raising rates three years ago.
“I’m afraid the Fed will think more of once-burnt, twice-shy, rather than once-burnt, twice-shy when it comes to inflation risks,” he said.
It remains unclear how Fed Chairman Jerome Powell, who is expected to remain in his post until his term ends in 2026, will respond to Trump’s new tariffs.