There’s a high chance that low-cost retailers such as Walmart will have to raise their prices if President-elect Donald Trump’s tariff proposal takes place, the company’s CFO said on Tuesday.
“We never want to raise prices,” John David Rainey told CNBC. “Our model is everyday low prices. But there probably will be cases where prices will go up for consumers.”
On the campaign trail, Trump touted the idea of tariffs as a way to increase domestic manufacturing and lower prices of U.S.-made products. The president-elect has proposed a 10 to 20 percent tariff on all imports and as much as 60 percent on goods from China.
But economists have warned that U.S. businesses and consumers will ultimately pay the price of tariffs which will hurt inflation and make goods more expensive.
Rainey’s warning echoes similar statements from other retailer executives.
Philip Daniele, the CEO of AutoZone, said on an earnings call in September that if they get tariffs the company “will pass those tariff costs back to the consumer.”
Lowe’s CFO Brandon Sink told investors on an earnings call that tariffs “certainly would add product costs” because 40 percent of the company’s costs of goods sold come from outside of the U.S.
A study conducted by the National Retail Federation, the world’s largest retail trade association, found that Trump’s proposed tariffs would have “a significant and detrimental impact on the costs of a wide range of consumer products sold in the United States.”
Consumers would have to pay $10.9 billion more for household appliances, at least $8.5 billion for furniture and at least $13.9 billion for apparel.
The Independent has asked the Trump team for comment on the executives’ warnings.
It is unclear how much Trump’s economic suggestions will be implemented. Ultimately, that will determine how much U.S. consumers are impacted by increased tariffs.
Rainey said it is too early to say which products would go up in price but that most of Walmart’s products are made, grown or assembled domestically, making them safe from drastic price increases. Additionally, Walmart imports goods from a range of countries.
Walmart CFO John David Rainey tells me “any incremental tariffs will be inflationary” for consumers. however 2/3rds of Walmart items are made, grown or assembled in the US
— Sara Eisen (@SaraEisen) November 19, 2024
Tariffs are no new concept and during his first administration, the president-elect imposed broad tariffs on materials imported from other countries, such as steel.
“We’ve been living under a tariff environment for seven years, so we’re pretty familiar with that,” Rainey told CNBC. “Tariffs, though, are inflationary for customers, so we want to work with suppliers and with our own private brand assortment to try to bring down prices.”
