Walmart, the world's largest retailer, has to start raising prices later this month due to the high cost of tariffs, executives warned in a clear signal that a trade war by U.S. President Donald Trump is filtering the U.S. economy.
As a leader in U.S. consumer health, Walmart’s clear statement on Thursday is also a sign of how the trade war affects the company, as Walmart’s ability to manage costs more aggressively than other companies to keep prices low.
Walmart's stock fell 2.3% in morning trading as the company's comparable U.S. sales exceeded expectations in the first quarter, but Walmart's stock price also declined to provide a second-quarter profit forecast.
Net sales rose 2.5% to $165.6 billion, which is estimated hair, while same-store sales rose 4.5%. Walmart's quarterly adjusted profit was 61 cents per share, before analyst consensus reached a consensus of 58 cents per share.
Many U.S. companies have cut or raised their full-year expectations after the trade war as consumers expand their budgets to cheap prices to buy everything from groceries to essentials. But Walmart’s statement will resonate nationwide, as about 255 million people shop on its stores and globally online, while 90% of the U.S. population lives within 10 miles of Walmart.
Walmart Chief Financial Officer John David Rainey said in a CNBC interview that U.S. shoppers will certainly start to rise in late May and June. Retailers must also cut orders while considering price elasticity, he said in a phone call after paying tribute to analysts.
Executives say Walmart, the largest importer of container goods in the United States, has been subject to tariffs, and it is still executives despite a truce tax that reduces taxes on imports of Chinese goods to 30%.
"We are very happy and appreciate the progress the government has made in tariffs ... but what makes me stress is that we still think it's too high," Renney said during the call.
He added: "We have certain items, certain categories of goods, and we rely on imports from other countries, and the prices of these things may rise, which is not good for consumers."
Other retailers also said they will raise prices. German sandal maker Birkenstock said on Thursday it plans to raise prices globally to completely offset the 10% impact of U.S. tariffs on EU-made goods.
U.S. consumer sentiment disappeared for the fourth straight month in April, showing attention, while the country's gross domestic product (GDP) contracted for the first time in three years in the first quarter, with Fanning worried about a recession.
Walmart CEO Doug McMillon said the retailer will not be able to absorb all the fees related to taxes due to narrow retail margins, but is committed to ensuring that tariffs related to general goods (mainly from China) will not make food prices higher.
To mitigate the impact, Walmart is working with suppliers to replace components affected by tariffs, such as replacing aluminum with fiberglass, which is not subject to tariffs.
Despite these efforts, Macmillan noted that it is more challenging to adjust costs when Wal-Mart imports from countries such as Costa Rica, Peru and Colombia, such as foods such as bananas, avocados, coffee and roses.
Analysts say Walmart is better positioned than its competitors because its size allows it to rely on suppliers and increase efficiency to keep customers exempt from tariffs, but only too much.
"Tariffs may be subject to some demands; it is unlikely to be disrupted," said Brian Jacobsen, chief economist for Attachment Wealth Management.
Walmart held its annual sales and profit forecast for fiscal 2026 on Thursday, but withheld forecasts for the second quarter's operating income growth and earnings per share forecast, citing "the liquidity operating environment... (this) makes very difficult forecasts very difficult and raises the levels and speed of tariffs in it."