Prices at Walmart are probably about to go up, according to the company’s CEO.
The reason: the mammoth chain imports nearly all its goods from China, which is one of the expected targets of President-elect Donald Trump’s import tariffs.
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“We never want to raise prices,” Walmart CFO John David Rainey told CNBC in a November interview. “Our model is everyday low prices. But there probably will be cases where prices will go up for consumers.”
Between 70% to 80% of Walmart’s suppliers are from China, according to data compiled by the Alliance for American Manufacturing.
Trump made a number of tariff promises on the campaign trail, including a “universal tariff” for all imported goods of 10% to 20% and one of 60% or more for goods specifically from China. And on Nov. 25, the president-elect announced his intentions to impose a 10% tariff on China and 25% on Canada and Mexico, respectively as one of his first executive orders once he takes office on Jan. 20.
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Rainey told CNBC he couldn’t publicly disclose which products could increase in price.
“We want to work with suppliers and with our own private brand assortment to try to bring down prices,” he said.
A new era of ‘reflation?’
The tariff talk has Wall Street buzzing with the word “reflation,” Politico reported, describing what could be an imminent period of newly rising prices, when households have barely recovered from the decades-high inflation they contended with through 2022 and 2023.
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Government data shows the U.S. imported $3.1 billion worth of goods in 2023. Among the most heavily imported categories, according to Trading Economics, were electronic equipment, machinery, cars and trucks, gas and diesel, and pharmaceutical products.
Many of these would likely be subject to the incoming Trump administration’s promised tariff regime.
And some industries may be more impacted than others. For example, the U.S. imports 40% of crude oil refined in the country, according to the American Fuel & Petrochemical Manufacturers. That oil becomes the petroleum that runs Americans’ cars, heats their homes and generates electricity.
Most of these imports came from Canada, and to a lesser extent Mexico, both of which are major U.S. trade partners and parties to the Canada-U.S.-Mexico Agreement, the successor to the North American Free Trade Agreement (NAFTA).
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That deal was re-negotiated in a series of tense sessions during Trump’s first term — but not before the president ordered a 25% tariff on steel imports and 10% tariff on aluminum, including products coming from the country’s North American neighbors.
Both Canada and Mexico were eventually made exempt from tariffs, but considering that Trump has since reiterated his tariff threats and signaled his intention to move quickly on a 25% tariff (unless they make changes to their border policies) that’s likely to change.
Who ends up paying the cost
While Trump’s argument is that tariffs will benefit American businesses, some business leaders worry it won’t be helpful.
Following Trump’s imposition of the aluminum and steel tariffs in 2018, employment in the steel industry fell by 7,100 between 2019 and 2021 and only began to bounce back after the tariffs were replaced with a quota system.
And according to Tax Foundation estimates, Trump’s proposed tariffs could generate $1.2 trillion in tax revenue, however, at the same time, they could cost the country 344,900 jobs and reduce GDP by 0.4%.
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But ultimately, those most likely to shoulder the cost of these tariffs are consumers — as studies have shown. In fact, WalMart’s Rainey isn’t the only U.S. business leader preparing people for increased prices under the proposed tariffs. Best Buy CEO Corrie Barry reportedly said electronics could get more expensive in a recent earnings call.
Barry told investors any added costs the company sees on imports from the three counties in question “will be shared by our customers,” adding that “there’s very little in [the] consumer electronics space that is not imported.”
“These are goods that people need, and higher prices are not helpful,” she added.
