Walmart is bracing for the potential impact of tariffs that President Donald Trump is seeking to impose, especially if tariffs against Canada and Mexico are implemented. The retailer reported slowing profit growth in its quarterly earnings, causing its shares to drop over 8%. While two-thirds of Walmart’s products are sourced from the U.S., Chief Financial Officer John David Rainey acknowledged that the company would not be “completely immune” from trade duties. The company plans to work with suppliers, shift supply, and lean into their private brand to mitigate costs and pass on savings to consumers.
At this time, Walmart has not factored potential tariffs into its guidance, as they are unsure if they will take effect next month. The passing on of tariff costs to consumers could result in price increases, as tariffs are ultimately inflationary for customers. Many U.S. companies, including Walmart, have not officially factored tariffs into their outlooks, but have game-planned various scenarios depending on the tariffs that go into effect.
The Federal Reserve has also acknowledged the potential impact of tariffs on inflation, as businesses may attempt to pass on higher input costs to consumers. The central bank cited trade and immigration policy changes as potential risks to the inflation outlook. Overall, the uncertainty surrounding tariffs has prompted companies like Walmart and Cisco to prepare for various scenarios and potential impacts on their businesses.
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