Walmart to start price increases due to Trump’s tariffs

They undoubtedly could absorb the tariffs costs. They're a fortune 50 company for a reason. When you answer to shareholder, like you mention, they're gonna do what is best for the bottom line.

And who can't absorb the tariffs are pretty much every other company.

 

Well they all did when Trump massively cut corporate taxes in his first term.... right. LOL

 

He also essentially got fired from there and seems to be conservative politically. So maybe he is 100 percent right, but he’s not the most unbiased source either.
The whole concern right now with tariffs is that the boomerang is potentially coming. Companies loaded up on cheap goods anticipating the increases which kept prices low and created jobs, so now with companies stocked and prices going up, demand goes down in the supply chain which costs jobs, prices go up with the new tariffs, and the economy gets clobbered. Don’t know whether it will happen, but it is at least in part already a self fulfilling prophecy. Consumer sentiment is at its second lowest point ever, so at some point something has to break. Be it tariffs or consumer spending. But even if tariffs are rolled back, business isn’t going to trust that he doesn’t change his mind like he has repeatedly.
For the first time in my life I’m thinking about pulling out of the market until there’s clarity, because the cognitive dissonance between a Q1 contraction (albeit small), impending price hikes, massive uncertainty about forward conditions given things change drastically with a tweet, and now a fast rising stock market against all that is a recipe for disaster, it just doesn’t seem at all sustainable.

 

The one who was fired over a decade ago when the world looked nothing like it does today, and then was fired due to sluggish sales and poor performance? Yes, Walmart should most definitely take advice from this guy.

 

Give me a break. Their operating margin was 4.29% in Q1 up from 4.20% LY. LOL. That is 9 basis points and razor thin margins. With a 30% cost increase on a decent size of their sales.. where does all that cost go? Who knows if it hurts Walmart... that's not the argument. The argument is that the customer is paying more.

 

What company out of the goodness of their heart is going to eat the tariffs and not pass it along to the consumer? The stockholders would have mgt drawn and quartered for doing so. They are in business to make money, that's it. Don't like the tariffs? Take it up with the orange emperor.

 

I too am a stock holder. Their stock price continues to rise

 

The full set of your assumptions doesn’t quite work since they don’t pay tariffs on retail price but cost of good excl shipping (assuming 100% markup their cost increase for a 30% tariff is 15%, if they’re willing to dilute margin). Your underlying point is correct though; Walmart can’t just absorb the tariff increase indefinitely even if it wanted. It will have to pass the costs through.

 

No i did it correct. I multiplied the percent times their cost of goods which was like 72% of sales or something (a markup of 28% ish.. it’s Walmart). I deleted the spreadsheet. So a 30% cost increase is 30% cost increase on their cost of goods. The wild guess was how much of their sales is from China goods which is why i gave a few estimates.

But yea, clearing 3-5% profit doesn’t leave you room for price increase absorption regardless what fired CEOs say.

 

What do traitors do? Love them?

 

Trump himself has said that when prices rise they tend to stay there.

 

I think that is the point these people who fail to understand tariffs miss. Yes, a huge company like wal-mart “can” strategically eat the costs for awhile. But doing so just crushes their earnings. Hurts the stock and causes belt tightening in the stores (layoffs, closures, etc). It’s the mom and pop sellers that get insta crushed, and unlike wal-mart won’t have cash on hand to hold out while eating losses. Maybe Wal-Mart uses their dominant position and squeezes the importers to eat some costs. Ok, then that crushes the importers earrings or possibly puts a bunch of them out of business. SOMEBODY pays, whether that’s consumers paying more, wal-mart eating costs, or suppliers eating costs.

At the end of the day it’s a tax. Kind of wild these guys freak out over 1% differences on the income tax but can’t comprehend the damage a 30% tariff tax straight to COGS will do. Hello McFly! It was even crazier at 145%. Like… essentially no trade would happen at 145%. Thats why ports were emptying out and alarm bells were going off about future empty shelves. It’s not some money hack where the govt collects a bunch of tariff revenue. You are collecting 145% of $0. Why not do 10,000% tariffs at that point. Same diff. Even that hack economist Art Laffer got that basic point correct with the so-called Laffer curve.

 

Here we go. Republican version of “greedflation”.

It was a dumb argument when democrats made it, and equally dumb now that Republicans are making it.

 

Difference is some companies during ‘22 were actually expanding margins. So the price hikes they were “passing through” were actually greater than whatever cost pressure they were trying to claim. Companies are going to charge the maximum they can, but I think some of those most publicly called out for “greedflation” were called out because they kind of used broad economic inflation as a cover to just straight up increase the top line AND expand margin when technically they didn’t have the same cost pressures in their COGS. Of course just like some companies were taking advantage, people probably tossed around “greedflation” too loosely where you could see companies actually were taking a financial hit and they got called out anyway.

Under tariffs, the govt takes their margins away by a % so 30% is a very large inflationary hit right on their COGS. 145% was going to shut everything down, in all practicality 30% probability isn’t much better for most businesses (at least over the longer term).

 

I’d argue big companies like Walmart raise prices as they receive higher cost goods and sell the goods they already own at lower costs for the new higher ticket for a bigger profit. Cost increase might help them in the short run.

 

Happens at gas stations all the time where they have similarly thin margins.

 

More tariff idiocy treatening Wal Mart if they don't eat the tariffs.

 

I don’t shop at Walmart so who cares what they do

 

I am guessing the people who do shop there?

 

I’m guessing many that are impacted are oblivious to this