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The impact of tariffs on U.S. inflation is coming! Walmart takes the lead in price hikes, and other retailers will follow suit

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The impact of tariffs on U.S. inflation is coming! Walmart takes the lead in price hikes, and other retailers will follow suit

Source: Wall Street Journal  

Under the Storm of Tariffs, Walmart Confirms Unprecedented Price Hikes Imminent, with U.S. Retail Industry Likely to Follow  


On May 15, while releasing better-than-expected quarterly earnings, global retail giant Walmart sent a clear signal to the market: tariff-driven price increases are coming soon. Walmart warned that price hikes triggered by tariffs are expected to hit store shelves imminently, with the company set to raise prices on certain products starting this month.  


John David Rainey, Walmart’s Chief Financial Officer, stated in an interview, "If you haven’t seen (price increases) yet, they will start in May and then become more pronounced." Rainey bluntly added, "The magnitude and speed of these price increases will be unprecedented."  


He further explained, "If there’s a 30% tariff on something, you’re likely to see double-digit (price increases)."  


As a retail giant serving 90% of U.S. consumers, Walmart is by far the largest company hinting at imminent price hikes for everyday goods due to tariffs. Analysts believe Walmart’s move could open the floodgates for industry-wide price increases.  


**The Floodgates for Retail Price Hikes May Already Be Open**  

According to an Axios report, Neil Saunders, Managing Director of GlobalData, noted, "If a price-focused player like Walmart is raising prices, it explains why other retailers may follow suit. Walmart is being honest about this, which encourages other retailers to have open discussions as well."  


In fact, other companies have already announced price hike plans. Ford Motor Company revealed last week that it would increase prices for three of its best-selling models. Luxury brand Hermès also stated that prices in the U.S. market would rise. Next week, Target, Lowe’s, and Home Depot will report earnings and discuss their financial outlooks, with investors closely watching whether they will join the wave of price increases.  


Walmart CEO Doug McMillon mentioned the "reality of thin retail margins" during the earnings call, stating, "Given the scale of the tariffs, even at the reduced levels announced this week, we cannot absorb all the pressure." This suggests that even if a temporary agreement is reached between China and the U.S. to lower additional tariffs from 145% to 30%, price increases remain inevitable.  


Ram Reddy, Chief Technology Officer at Nagarro Digital Engineering, predicted that electronics and toys would be among the main categories affected by Walmart’s price hikes. Meanwhile, McMillon emphasized that Walmart would strive to keep prices for food and consumables "as low as possible." However, tariffs on imports from countries like Costa Rica, Peru, and Colombia are putting pressure on products such as bananas, avocados, and coffee.  


If even Walmart, with its slogan "Save Money. Live Better," struggles to maintain its low-price promise, U.S. consumers and the entire retail industry may face an unprecedented price storm.  


**Disclaimer**: The views expressed in this article represent solely the author’s personal opinions and do not constitute investment advice from this platform. This platform makes no guarantees regarding the accuracy, completeness, originality, or timeliness of the information provided and shall not be liable for any losses arising from the use of or reliance on such information.

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