Americans may have to kiss goodbye to Walmart’s ‘everyday cheap prices’ if President-elect Donald Trump’s proposed tariffs take effect, warns CFO

WalMart’s CEO predicts that prices will rise.

The reason is because the massive chain buys nearly all of its items from China, which is one of the predicted targets of President-elect Donald Trump’s import taxes.

“We never want to raise prices,” Walmart CFO John David Rainey told CNBC during an interview. “Our model is based on everyday low prices. However, in other circumstances, consumer costs will likely rise.”

According to data gathered by the Alliance for American Manufacturing, China accounts for 70% to 80% of Walmart’s suppliers.

On the campaign trail, Trump promised a “universal tariff” of 10% to 20% on all imported goods, as well as a duty of 60% or higher on imports from China. On November 25, the president-elect stated plans to levy a 10% tariff on China and 25% on Canada and Mexico as one of his first executive orders after taking office on January 20.

Rainey told CNBC that he couldn’t openly say which products would see price increases.

“We want to work with suppliers and with our own private brand assortment to try to bring down prices,” he told me.

A new era of ‘reflation?’

The tariff rhetoric has Wall Street buzzing with the word “reflation,” Politico said, characterising what could be an upcoming time of newly rising prices, when people have barely recovered from the decades-high inflation they faced in 2022 and 2023.

According to government records, the United States imported $3.1 billion of products in 2023. According to Trading Economics, the most heavily imported categories were electronic equipment, machinery, cars and trucks, petrol and diesel, and pharmaceuticals.

Many of these are anticipated to be susceptible to the incoming Trump administration’s proposed tariff regime.

And certain industries may be more affected than others. According to the American Fuel and Petrochemical Manufacturers, the United States imports 40% of the crude oil it refines. That oil is converted into petroleum, which powers American automobiles, heats houses, and creates electricity.

The majority of these imports came from Canada, and to a lesser extent Mexico, both of which are key U.S. trading partners and signatories to the Canada-U.S.-Mexico Agreement, the successor to the North American Free trading Agreement (NAFTA).

That agreement was renegotiated in a series of heated sessions during Trump’s first term—but not before the president imposed a 25% tax on steel imports and a 10% tariff on aluminium, including products from the country’s North American neighbours.

Both Canada and Mexico were finally protected from tariffs, but now that Trump has signalled his desire to impose a 25% tariff on their exports unless they adjust their border rules, that exemption is likely to vanish.

Who ends up paying the cost

Trump claims that tariffs will benefit American businesses, but several business executives are concerned that they will not.

Following Trump’s implementation of aluminium and steel tariffs in 2018, employment in the steel industry declined by 7,100 between 2019 and 2021, only to recover after the tariffs were replaced by a quota system.

And, according to Tax Foundation calculations, Trump’s planned tariffs could raise $1.2 trillion in tax revenue while costing the country 344,900 jobs and reducing GDP by 0.4%.

However, studies have indicated that consumers are most likely to bear the burden of these levies. In truth, WalMart’s Rainey isn’t the only business leader in the United States prepping people for higher prices due to potential tariffs.

Corrie Barry, CEO of Best Buy, reportedly stated on a recent earnings call that devices could become more expensive.

Barry told investors that any additional costs the company incurs on imports from the three countries in question “will be shared by our customers,” and 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 stated.