Tariff Impacts Take Hold: Retail Giant Walmart Leads Price Increases! Will Consumers Bear the Cost?

TradingKey - On May 15, Walmart, the global retail giant, reported its earnings for the first quarter, revealing profits that surpassed expectations, although sales were slightly below forecasts. The company also indicated to the market that it plans to raise prices on certain products starting this month due to the impact of tariffs.

Despite a temporary agreement reached this week between the US and China to lower additional tariffs from 145% to 30%, price increases remain unavoidable. During the earnings call, Walmart CEO Doug McMillon noted that given the scale of the tariffs, Walmart cannot absorb all the pressure, even at the reduced levels announced this week.

Walmart stated that over two-thirds of the products it sells in the US are manufactured domestically; however, key categories such as toys and electronics are supplied by China. According to Ram Reddy, Chief Technology Officer at Nagarro Digital Engineering, these categories will be the primary ones affected by Walmart's price hikes.

Chief Financial Officer John David Rainey mentioned that price increases could begin as early as this month, with certainty by June.

Due to the unpredictability of future trade negotiations, Walmart announced it is unable to provide its usual profit guidance for the next three months.

Currently, Walmart is the largest company indicating that tariffs will lead to price increases in consumer goods. Analysts speculate that Walmart might pass the tariff costs onto consumers, but will they be willing to bear the cost? If consumers choose to shop elsewhere, Walmart's sales performance could be impacted.

In fact, other companies are also announcing plans to raise prices. Last week, automaker Ford announced it would increase prices on three of its best-selling models. Hermes has also stated that prices in the US market will rise. Mattel, known for making Barbie dolls and with 40% of its products manufactured in China, announced earlier this month that it would raise prices as necessary.

Next week, retail companies Target, Lowe's, and Home Depot are scheduled to release their earnings, and investors should pay attention to any adjustments they make in pricing.