COLORADO SPRINGS, Colo. (KKTV) - President Donald Trump has asked Walmart to shoulder the expenses of the new tariffs instead of transferring the costs to customers.
Following this, Walmart CEO Doug McMillon indicated that the corporation may have to increase prices due to these duties. He mentioned during the company’s first-quarter earnings call on Thursday that despite a recent 90-day agreement reached between the U.S. and China, increased tariffs might still lead to price hikes.
On Truth Social, the president stated that Walmart should "absorb the tariffs" instead of increasing prices.
"I'll be keeping an eye on this, and so will your customers," stated President Trump.
McMillon stated that the corporation might attempt to cover as many costs as feasible itself, particularly concerning food items, with the aim of maintaining lower pricing; however, he mentioned that products from China such as toys and electronic devices may still experience higher prices, even after the latest agreement.
In addition, Joe Craig from the University of Colorado, Colorado Springs, suggested that the company may not have many additional options left.
Craig stated, "People often say that Walmart could absorb those costs, and indeed they could; however, doing so would cause their stock price to plummet, which would upset their shareholders, leading to a downturn in all our investment portfolios."
He described that as too simplistic a solution for what is actually a much more complex issue. Since the tariffs came into play, Craig has maintained his stance that most economists oppose tariffs; however, he acknowledged that there could be valid political motivations behind implementing them.
Craig mentioned that if the objective is to shift manufacturing to the US, consumers may experience higher costs well before seeing any progress in this direction.
If Trump’s objective truly is to repatriate manufacturing to the U.S., this could potentially be achieved through tariffs. In my estimation, it might require around ten years. Although it would certainly be an extended endeavor, it remains feasible," Craig stated. "With just three and a half years remaining in his term, who can predict what stance the subsequent president may adopt? Would you significantly alter your worldwide operations, particularly considering how many times within the past ninety days these tariff adjustments have been modified?
Craig mentioned that assessing the effect of tariffs becomes challenging due to their fluctuating nature, which can result in ambiguity for chief executive officers as well.
"CEOs will likely wait and observe how things develop, so I wouldn’t anticipate anyone rushing to repatriate manufacturing jobs to the U.S. They’d probably need to maintain these tariff rates for approximately one year, but I doubt that change will occur," Craig stated.
He mentioned that certain businesses have already initiated price hikes, incrementally increasing them bit by bit; however, he warned that within the coming month, these effects might begin to be more apparent.
Businesses are clever; they will gradually increase prices over time," he remarked. "If there are items you intended to buy soon, this could be an opportune moment.
Currently, tariffs on Chinese products have been reduced from 145% to 30%. Given that these duties have fluctuated significantly over just the last 90 days, Craig mentioned it's challenging to predict precisely how consumers will be affected. Nevertheless, he stated that should they persist in any capacity, numerous businesses are already experiencing repercussions, and prices seem poised to keep rising.
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