Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Walmart has cautioned customers to brace for higher prices despite the recent agreement between the US and China to reduce punitive tariffs imposed during Donald Trump’s trade war.
The world’s largest retailer is particularly vulnerable to the US president’s trade policies. China and Mexico account for the majority of its imports, which constitute a third of its US merchandise.
This week, Washington and Beijing reached a temporary truce, with Washington lowering tariffs on Chinese imports to approximately 40 percent, down from a peak of 145 percent.
Doug McMillon, Walmart’s CEO, expressed skepticism that the tariff reduction would prevent future price hikes.
“We will strive to keep our prices competitive, but given the impact of the tariffs, even at the reduced rates announced this week, we cannot absorb all the pressure due to the narrow margins in retail,” he stated.
McMillon was one of several retail executives who opposed tariffs during a meeting at the White House, cautioning Trump about the potential for increased prices and empty shelves.
The first quarter of the year was tumultuous for the US economy, with Trump implementing and altering tariffs on various trading partners. The 145 percent tariff on Chinese goods went into effect on April 9.
McMillon’s warning coincided with Walmart reporting a 4.5 percent year-over-year growth in comparable sales at its US stores in the first quarter, exceeding the 3.7 percent forecast by Wall Street analysts.
The company maintained its financial outlook for the year, anticipating 3 to 4 percent growth in net sales. However, it refrained from providing profit guidance for the second quarter due to uncertainties surrounding trade policies.