The forceful tariffs promoted by President-elect Donald Trump would likely lead to higher prices for consumers, according to a top executive at Walmart, the largest U.S. company by revenue, in a notable warning about the potential inflationary effects of the tariff tool. Trump’s preferred trade policy.
“There will probably be cases where prices will go up for consumers,” John David Rainey, the retailer’s chief financial officer, told CNBC of the impact on his company’s prices of the 10% tax on all imports and the 60% to Chinese imports backed by Trump.
The tariffs “are inflationary for customers,” Rainey added in the interview published Tuesday alongside Walmart’s quarterly earnings report.
It is not immediately clear how quickly the tariffs could be implemented. “The odds of a widespread 10% tariff in 2025 are low,” Michael Feroli, JPMorgan’s chief U.S. economist, wrote in a recent note to clients.
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“We never want to increase prices (…) so we want to work with suppliers and with our own range of private brands to try to reduce prices,” Rainey explained about the retailer’s strategy in a tariff environment.
Rainey’s comments suggest the indirect impact of tariffs, as companies, in this case Walmart, pay the import tax to the U.S. Treasury and often pass along the higher input costs associated with these tariffs to consumers. .
Tariffs are a key issue as Trump defines his economic agenda for his second presidential term.
“Tariffs are the best thing ever invented,” Trump said in September, alluding to his preference for import taxes as a catalyst for domestic manufacturing and a foreign policy tool.
Economists largely agree that tariffs would increase inflation, which comes at an inopportune time for American consumers, as annual inflation has fallen from a four-decade high of more than 9% to still 2.6%. historically above average.
From 0.3 to 0.4 would be the increase in percentage points in annual inflation due to the tariffs supported by Trump, according to forecasts by economists from Bank of America and Goldman Sachs.
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Tariffs are a controversial policy among the most influential names in Republican politics, with critics including Elon Musk, the world’s richest person and a close Trump adviser, who said earlier this month that he is “against giant tariffs and “and billionaire and GOP mega-donor Ken Griffin, who said Monday that he is “very concerned about the president’s willingness to resort to tariffs as a trade policy.”
Those in the most hawkish corner on tariffs include Scott Bessent, a leading candidate for Trump’s nomination for Treasury secretary, who has repeatedly rejected the prevalent view that tariffs are inflationary.
Walmart’s earnings report on Tuesday beat Wall Street’s expectations across the board: Its quarterly profits and sales topped analyst consensus estimates and the company said it expects profits to rise more than 10% to a record level. this fiscal year, according to the updated guidance.
Shares of the retail giant rose 4% to a record high of nearly $88 per share in morning trading.
This article was originally published by Forbes US
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