Walmart has warned that it will raise prices on food, electronics and toys later this month, citing increased costs from tariffs.
CEO Doug McMillon commented on the price hikes on an earnings call on Thursday. He said the big box retailer is unable to absorb the costs of higher import taxes, despite the recent reduction of duties on Chinese goods. Earlier this week, President Donald Trump made a temporary 90-day truce with China to lower the 145% tariff to 30% on goods and products sent to the US.
Walmart is the largest importer of container goods in the US, with 60% of its imports coming from China. McMillon also noted tariffs on countries like Colombia, Costa Rica and Peru will add price pressures on food imports, including avocados, bananas, and coffee. The news comes as US shoppers are feeling the sting of higher prices. In April, consumer sentiment fell for the fourth straight month.
Economists fear that widespread uncertainty around trade policy and the possibility of higher inflation will drive down demand, forcing businesses to pull back on investment and cut costs. That can have a ripple effect that weakens the broader economy.
Walmart responded to a request for comment from CNET with a summary of its first quarter earnings report. "We are focused on the long-term. What history tells us is that when we lean into these periods of economic uncertainty, Walmart emerges on the other side with greater share and a stronger business," the company said in an emailed statement.
Inflation could get stickier
Walmart is only one example of higher retailer prices, along with other companies like Microsoft. Although consumer prices only rose 2.3% annually in April, the slowest pace in years, experts have said the effects of the tariffs have not caught up yet. Supply shortages and higher duties can set off steeper inflation, as importers generally pass on price hikes to consumers.
On Monday, the Federal Reserve released a statement on the economic outlook. Federal Reserve Governor Adriana Kugler said the nation is "likely to experience lower growth and higher inflation," adding that "there could also be significant effects on productivity" over time that lower economic activity across the country.
Over the last few months, economists have warned that the combination of higher inflation and lower economic growth could create a stagflation scenario. The administration's on-again, off-again tariff agenda is likely to have a volatile effect on consumer prices and spending patterns in the near future. You can monitor daily changes with our CNET tariff price tracker and check out this guide if you need advice on whether to buy or wait to buy popular tech items.
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