Walmart wants you to know that even with the trade war deescalation higher prices are inevitable

Anne D'Innocenzio

The Associated Press

<a href="https://fortune.com/company/walmart/" target="_blank">Walmart</a>, which became the nation&#8217;s largest retailer by making low prices a priority, has found itself in a place it&#8217;s rarely been: Warning customers that <a href="https://fortune.com/2025/05/15/walmart-amazon-price-increase-trump-china-tariff-trade-war/">prices will rise</a> for goods ranging from bananas to car seats.<div class="paywall-selector"></div><div class="paywall">



Executives at the $750 billion company told industry analysts Thursday that they&#8217;re doing everything in their power to absorb the higher costs from&nbsp;<a href="https://apnews.com/article/china-businesses-us-tariffs-pause-trade-ee5de150ac4ea36852c11bb6ab21af39">tariffs</a>&nbsp;ordered by President Donald Trump.



Given the magnitude of the duties, however, the highest since the 1930s, higher prices are unavoidable, and they will hurt Walmart customers already buffeted by inflation over the past three years.



Trump’s threatened 145% import taxes on Chinese goods were reduced to 30% in a&nbsp;<a href="https://apnews.com/article/china-us-switzerland-tariffs-negotiations-b3f5174d086e39b2522ab848ddad9372">deal announced Monday</a>, with some of the higher tariffs on pause for 90 days.



Those higher prices began to appear on Walmart shelves in late April and accelerated this month, Walmart executives said Thursday. However, a larger sting will start to be felt in June and July when the back-to-school shopping season goes into high gear.



“We&#8217;re wired to keep prices low, but there’s a limit to what we can bear, or any retailer for that matter,” Chief Financial Officer John David Rainey told The Associated Press on Thursday after the company reported strong first-quarter sales.



Rainey emphasized that prices are rising not just for discretionary items such as patio furniture and trendy fashions, but for basic necessities as well. The price of bananas, imported from Costa Rica, rose from 50 cents per pound, to 54 cents. He thinks car seats made in China that currently sell for $350 at Walmart will likely cost customers another $100. Baby strollers are also sourced from China, Rainey said.



Higher prices arrive as many Americans pull back on spending as they grow increasingly uneasy about the economy. A&nbsp;<a href="https://apnews.com/article/tariffs-retail-consumer-trump-economy-ecd398941ba41d9a94145c5d75da6b24">slew of companies</a>&nbsp;including toy manufacturer <a href="https://fortune.com/company/mattel/" target="_blank">Mattel</a>, toolmaker Stanley Black &amp; Decker and consumer products giant Procter &amp; Gamble have announced higher prices or plans to raise prices.



But Walmart&#8217;s moves are even more significant given its outsized power in the retailing landscape. Walmart says that 90% of American households rely on the retailer for a range of products, and more than 150 million customers shop on its website or in its stores every week. Analysts will dissect the earnings reports from other retailers including <a href="https://fortune.com/company/target/" target="_blank">Target</a> and <a href="https://fortune.com/company/home-depot/" target="_blank">Home Depot</a>, set to be released next week.



Government data Thursday revealed&nbsp;<a href="https://apnews.com/article/economy-spending-tariffs-retail-2849f1fae55a1da5907aaab1b9941972">slowing sales growth</a>&nbsp;for retailers. Walmart says that its consumers have become cautious and selective.



<a href="https://apnews.com/article/china-tariffs-us-trump-150fab3a44ec055845e47c82bde544c2">Tariffs on China</a>&nbsp;and&nbsp;<a href="https://apnews.com/article/trump-tariffs-reciprocal-imports-tax-trade-economy-54c0a26687dc96157d96229068894720">other countries</a>&nbsp;are threatening the low-price model at the core of Walmart’s success.



The full impact of tariff costs had been delayed as companies tried to beat the clock by bringing in foreign goods before Trump’s tariffs took effect. Retailers and importers had also&nbsp;<a href="https://apnews.com/article/trump-tariff-economy-recession-china-imports-trade-8d90bb37735e833c43a7b7a9d5a0b9a2">largely halted shipments</a>&nbsp;of shoes, clothes, toys, and other items due to new tariffs, but many&nbsp;<a href="https://apnews.com/article/trump-tariffs-china-business-reaction-0c12feba442877de63d5009c2c300f55">are resuming imports</a>&nbsp;from China in the narrow window that opened during the temporary “truce” this week, hoping to avoid sparse shelves this fall.



Yet retailers, already operating on thin margins, say they have no choice but to raise prices to offset higher costs from tariffs. And they are also bracing for higher shipping costs fueled by a surge of companies scrambling to get their goods on ships to the U.S.



Rainey told The Associated Press that the retailer did not pause shipments from China as a result of the tariffs like others because it didn&#8217;t want to hurt its suppliers and wanted to keep merchandise flowing. It has built in hedges against some tariff threats. Two-thirds of Walmart’s merchandise is sourced in the U.S., with groceries now accounting for roughly 60% of Walmart’s U.S. business.



Still, Walmart isn’t immune.



CEO Doug McMillon told analysts Thursday that Walmart imports general merchandise from dozens of countries. But China, in particular, represents a big chunk of volume in certain categories like electronics and toys.



Tariffs on countries like Costa Rica, Peru and Colombia are raising costs on groceries like avocados, coffee and roses, in addition to bananas, company executives said. In some cases, Walmart is absorbing costs on general merchandise within departments or a category and not simply passing on a tariff cost attributable to each item individually, executives said.



Walmart is also asking suppliers to swap input materials for components if possible, for example, using fiberglass instead of aluminum, which Trump hit with tariffs in early March.



“We&#8217;re very dependent upon imports for these types of products,” Rainey told The Associated Press.



He said there are some goods for which Walmart simply can&#8217;t shift production or produce easily in the United States.



McMillon, who was among a select group of CEOs of major retailers who met with Trump at the White House late last month to discuss tariffs, told analysts Thursday that he&#8217;s hoping tariffs would be further reduced.



Walmart earned $4.45 billion, or 56 cents per share, in the quarter ended April 30, down from $5.10 billion, or 63 cents per share, in the same period last year.



Adjusted earnings per share were 61 cents, exceeding the 58 cent projections from industry analysts, according to FactSet.



Revenue rose 2.5% to $165.61 billion, just short of analyst estimates.



Walmart’s U.S. comparable sales — those from established physical stores and online channels — rose 4.5% in the second quarter, though that’s slowed from a 4.6% bump in the previous quarter, and a 5.3% increase in the third quarter of 2024. .



Business was fueled by health and wellness items as well as groceries. Sales were weaker in home and sporting good, which was offset by robust sales of toys, automotive goods and kid’s clothing, the company said.



Global e-commerce sales rose 22%.



Walmart said it expects sales growth of 3.5% to 4.5% in the second quarter.



Like many other U.S. companies, however, it did not issue a profit outlook for the quarter because of the chaotic environment, with stated U.S. tariff policies changing constantly. The company maintained its full-year guidance issued in February.</div>

“We're wired to keep prices low, but there’s a limit to what we can bear, or any retailer for that matter,” Chief Financial Officer John David Rainey said.

Did your workplace make our list of the 100 Best Companies to Work For?
<a href="https://fortune.com/ranking/best-companies/?&itm_source=fortune&itm_medium=article_tout&itm_campaign=AprMayMag">Explore this year's list.</a>

F-Wire

Tariffs and trade

Retail

Finance

Walmart wants you to know that even with the trade war deescalation higher prices are inevitable | Fortune

Chris Morris

A different kind of Brat summer: Johnsonville will offer an 80-pound, 249-link variety pack of sausages, brats, and hot dogs, which comes with its own hand truck

/2025/05/23/brat-summer-johnsonville-sausages-brats-hot-dogs-249-party-starter-contest/

Brawny triples down on the paper towel wars with a new 3-ply option—and it’s giving out free house cleanings

/2025/05/23/brawny-three-ply-paper-towel-free-house-cleanings/

Jennimai Nguyen

Marketing Brew

Brands could start shunning AI for social media marketing and advertising, instead using their feeds to show off ‘proof of reality,’ consultant says

/article/brands-shunning-ai-social-media-marketing-advertising/

Sasha Rogelberg

A frowning man holds the door open to an Urban Outfitters.

Tariffs are threatening the accuracy of fall fashion trends by forcing earlier clothing shipments amid supply-chain headaches, Urban Outfitters CEO says

/2025/05/22/tariffs-threatening-accuracy-fall-fashion-trends-urban-outfitters/

Fatima Hussein

U.S. Mint says it’s stopping penny production

/2025/05/22/u-s-mint-says-its-most-recent-order-of-penny-blanks-will-be-its-last/

Leo Schwartz

OpenFX raises $23 million led by Accel to build near-instant cross-border transactions

/2025/05/22/openfx-accel-stablecoins-crypto-venture-foreign-exchange-blockchain/

Emma Burleigh

Hundreds of billionaires pledged to give away $600 billion to charity—but the Bill Gates and Warren Buffett era of philanthropy may be over

https://fortune.com/2025/05/24/gates-buffett-philanthropy-new-era-of-giving-women-french-gates-mackenzie-scott/?itm_source=parsely-api

Jason Ma

Jerome Powell tells Princeton grads not to take universities for granted and that 'integrity is all we have—guard it carefully'

https://fortune.com/2025/05/25/jerome-powell-princeton-commencement-speech-universities-trump-harvard-integrity-fed-rates/?itm_source=parsely-api

Dairy Queen CEO says he learned from Warren Buffett that being the 'smartest person in the world' isn't the most important attribute for success

https://fortune.com/2025/05/21/dairy-queen-ceo-warren-buffett-advice-job-interview-passion-intelligence/?itm_source=parsely-api

Alan Suderman

15 years ago, a software developer paid for two pizzas with 10,000 bitcoin. Those pies would be worth $1.1 billion today

https://fortune.com/article/pizza-bitcoin-day-story-laszlo-hanyecz-papa-johns-pizzas-value/?itm_source=parsely-api

Preston Fore

Shark Tank's newest star gives Gen Z grads a reality check—that they need to 'wake up earlier and stay up later' to achieve their dreams

https://fortune.com/2025/05/23/billionaire-kind-founder-daniel-lubetzky-gen-z-college-graduate-advice-shark-tank-boomers/?itm_source=parsely-api

There's a 'buyer's strike' on U.S. assets as foreign investors can't stomach huge deficits anymore, analyst warns

https://fortune.com/2025/05/24/debt-crisis-foreign-buyers-strike-us-assets-deficits-treasury-bonds-dollar-selloff/?itm_source=parsely-api