Walmart’s approach to President Donald Trump’s tariffs has shifted markedly since last month, marking a turning point for the retail giant as it faced investors. CEO Doug McMillon previously downplayed the potential impacts of tariffs, alluding to past challenges like the post-9/11 landscape, while the head of its international division skirted the topic entirely in discussions with corporate leaders.
However, during a recent earnings call and subsequent interviews with Finance Newso regarding its quarterly performance, Walmart unequivocally warned that the introduction of additional duties on imports would likely lead to increased prices for consumers.
“We’re grateful for the progress made by the [Trump] administration in lowering tariffs from earlier levels, but they remain excessively high,” Walmart’s Chief Financial Officer John David Rainey stated during an interview with Finance Newso.
He expressed concern that while Walmart strives to maintain low everyday prices, the scale of these tariff increases exceeds what any retailer could absorb unscathed.
The company’s remarks come with inherent risk, considering Trump’s history of targeting companies that dissent from his policies. True to form, Trump criticized Walmart over the weekend on social media, encouraging the retailer to “EAT THE TARIFFS.”
This notable shift in Walmart’s stance regarding tariffs encapsulates the precarious position that corporate executives find themselves in as they balance the interests of customers, shareholders, and a frequently unpredictable White House amid fluctuating trade policies. It also underscores a growing willingness among corporate leaders to voice their discontent regarding Trump’s policies.
“Tariffs have emerged as a prominent topic in corporate engagement, breaking a phase of relative silence,” noted Joanna Piacenza, Vice President of Thought Leadership at Gravity Research, a firm specializing in corporate reputational risk management. “It’s a subject that CEOs feel empowered to discuss as it directly ties to business outcomes, unlike other divisive issues that are presently dominating discussions.”
In response to Trump, Walmart reiterated its commitment to low pricing. “Our goal has always been to keep prices as low as possible, and we will continue to strive towards that,” Walmart affirmed in a statement. “We will maintain our low pricing for as long as feasible, given the realities of narrow retail profit margins.”
Walmart opted not to expand on its statement, but a source familiar with the company suggested that the decision to caution about potential price hikes stemmed from a desire to prepare customers and investors for the forthcoming changes.
Walmart is not alone in voicing concerns about the impact of tariffs on pricing; other major companies like Microsoft and Subaru have also issued warnings about the implications of tariffs. Yet, on the opposite end of the spectrum, Home Depot’s CFO Richard McPhail recently declared that the company plans to maintain its current pricing strategy across its offerings.
As the quarter progresses, consumers and investors are poised to gain further insights into how various corporations will respond to pricing challenges, with Target and Lowe’s among the next batch of companies set to release their first-quarter earnings results.
Changing Dynamics
At the onset of Trump’s presidency, the corporate sector rallied in support, contributing a record $239 million to his inauguration committee. Among the contributors were the National Retail Federation, which represents the interests of the industry, and major retailer Target, which made a significant $1 million donation — its first in a decade. Walmart’s $150,000 contribution mirrored its support across previous inaugurations, including those of both Trump and President Joe Biden.
In the months following, many companies aligned themselves with Trump’s initiatives, rolling back or eliminating diversity and inclusion programs in anticipation of tax cuts promised by the administration. For the first two months of Trump’s presidency, corporate responses to the administration’s policies were relatively muted.
However, the introduction of tariffs sparked a wave of corporate pushback. Following Trump’s April 2 announcement about imposing substantial tariffs on numerous countries, the number of corporate statements regarding the issue surged after the tariffs were reduced on April 9. Data from Gravity Research indicated that corporate responses increased from 79 to 139 between these two dates across various platforms including press releases and earnings calls.
A notable backlash emerged from executives, many of whom had previously heralded Trump’s economic policies. Both Delta Air Lines and JPMorgan Chase’s CEOs, companies that had each pledged $1 million to Trump’s inauguration, openly criticized the detrimental impact of tariffs on consumer spending.
JPMorgan Chase’s CEO Jamie Dimon, prior to the suspension of certain duties, voiced concerns about the potential for a U.S. recession during an appearance on “Mornings With Maria,” a show known to attract Trump’s attention. This marked a stark departure from his prior statements, where he had labeled the tariffs as beneficial to national security.
Similarly, Delta’s CEO Ed Bastian expressed to Finance Newso that uncertainties stemming from the tariffs were beginning to dampen airfare bookings and criticized Trump’s inconsistent trade strategies. Previously confident in Delta’s prospects, the company shifted to a more cautious stance shortly thereafter.
In the same context, although Walmart had maintained a low profile on the subject of tariffs, McMillon participated in a meeting with Trump in late April alongside other retail leaders, after which all parties reported that the discussion was “productive.”
Now, Walmart has overtly outlined its beliefs on how tariffs may affect its operations and customer pricing, reaffirming its annual projections yet withholding estimates for its second-quarter earnings due to the unpredictable tariff environment.
Retail analyst Michael Baker of D.A. Davidson remarked that the clarity and directness of the language used by Walmart executives have notably increased. He speculated that Walmart is strategically preparing consumers for potential price adjustments while also sending a clear message to policymakers regarding the impracticality of expecting retailers to absorb tariff costs entirely.
This transparent communication prompted Trump to respond on his Truth Social platform, asserting that Walmart should not blame tariffs for necessary price hikes. He noted Walmart’s robust earnings from the previous year, echoing sentiments often voiced by Democratic lawmakers.
Walmart’s relatively slimmer profit margins compared to its competitors could elucidate its need for transparency in discussing potential price increases. The company’s operating margins hover between 4% and 5%, contrasting sharply with higher margins seen in retailers of discretionary goods.
In its remarks, Walmart struck a careful balance, expressing appreciation for the administration’s strides in tariff negotiations while reinforcing the desire for further reductions. This stance reflects Walmart’s commitment to fostering transparency about the realities of tariffs as it serves a price-sensitive customer demographic.
Analysts observed that Walmart’s geographic reach and status as the leading grocery retailer in the U.S. may afford it a level of relative immunity from backlash compared to other companies. Approximately 90% of the U.S. population resides within 10 miles of a Walmart store.
The ongoing challenge for any retailer remains the precarious nature of its stance in relation to governmental policies. Baker remarked on the difficulty of being at odds with the U.S. government, especially given the substantial influence Trump holds.
Nevertheless, Walmart has effectively communicated to its customers an assurance to maintain low prices on essential items, including groceries. Baker concluded, “Should prices rise, customers recognize that Walmart will still provide good value in comparison to its competitors.”
As the retail landscape evolves, further updates from major retailers such as Target and Best Buy are anticipated, which will shed light on how tariffs may influence pricing strategies. According to Piacenza, companies are keenly observing one another’s actions. “They want to align with their peers rather than risk standing out as the tallest blade of grass,” she noted. The proactive communication by brands regarding price increases may help to mitigate consumer blame during this volatile period.
