Walmart’s Warning (Editorial)

(Walmart Inc.)

First the good news: Walmart late last month reported better-than-expected third-quarter earnings, generating optimism among analysts about a strong holiday season.

Now the bad news: Walmart CFO John David Rainey warned that the tariffs proposed by President-elect Donald Trump could mean higher prices. “Tariffs are going to be inflationary. There’s no disputing that,” Rainey told Fox Business. “Likely consumers are going to pay more for the items that they pay and that these tariffs are applied to.”  

Trump has suggested tariffs of 60%-100% on imports from China and tariffs of 10%-20% on imports from all other foreign countries. Rainey noted that although two-thirds of the items Walmart sells are made, grown or assembled in the U.S., the world’s largest retailer is “in no way immune to this.” 

While the idea of bringing manufacturing back to the U.S. has merit, the pandemic showed just how difficult — and inflationary — that is. Not to mention that consumer spending accounts for almost 70% of the U.S. economy. Anything, like inflation, that dampens that spending could have a domino effect on the entire economy.

For better or worse, supply chains are global now. Business owners need to prepare not only for potentially higher prices but supply chain disruptions.