Walmart and Tariff Implications

WASHINGTON – Treasury Secretary Scott Bescent confirmed on Sunday that Walmart, the largest retailer in the U.S., might pass on some of the costs from President Donald Trump’s tariffs to consumers.

In response to Trump’s warning that Walmart should avoid raising prices due to these tariffs, Bescent mentioned he had spoken with the company’s CEO and would be monitoring their pricing closely.

As uncertainty around Trump’s economic strategies persisted, Bescent downplayed inflation worries, suggesting that the unpredictability brought on by Trump might actually be a useful tactic in trade negotiations. He also dismissed concerns regarding a Moody’s downgrade of U.S. government debt.

However, it seems Walmart isn’t fully on board with the idea of absorbing tariffs, as Trump suggested they and China should do.

Bescent shared that he had a conversation with Walmart CEO Doug McMillon, emphasizing that what matters most to Walmart customers right now is the decrease in gasoline prices.

According to AAA, gas prices have been around $3.18 per gallon for about a year.

“Walmart will absorb some of the tariffs, but some costs might be passed on to consumers,” he told CNN. “Overall, I think inflation will align, but I can’t totally blame consumers after what they’ve dealt with under Biden.”

Walmart did not provide a comment regarding Bescent’s remarks about his discussion with McMillon.

On social media, Trump reiterated that Walmart should not raise prices to cover the new tariff costs, stating, “I’m watching, and so are your customers!!!”

Bescent indicated that Walmart’s recent revenue call was meant to present a worst-case scenario to avoid legal issues.

Nevertheless, Walmart’s executives mentioned that higher prices have been appearing on shelves since late April and have surged this month.

“Walmart is generally focused on keeping prices low, but retailers have limits on what they can endure,” CFO John David Rainey shared with the Associated Press.

Bescent argued that the ratings downgrade was merely a “lagged indicator” since the financial markets have already accounted for a total federal debt nearing $36 trillion.

Yet, the Responsible Federal Budget Committee pointed out that Trump’s tax policies might add approximately $3.3 trillion to the deficit over the next decade, with a notable $600 billion increase projected in 2027 alone.

Despite these concerns, Bescent maintained that the deficit isn’t a major issue, claiming that the economy is growing at a pace that exceeds debt accumulation.

However, most independent analyses are skeptical about the administration’s assertion that Trump’s tax cuts from 2018 didn’t contribute to a significant increase in the average growth rate.

These tax cuts did spur growth before the pandemic, but also significantly raised the fiscal deficit, contrary to earlier estimates from the Congressional Budget Office.

Regarding tariffs, the Trump administration is trying to reach agreements with around 40 major trading partners ahead of a July deadline.

Additionally, early negotiations are underway with China, following an agreement to reduce tariffs from 145% to 30% a week ago, which allows further discussions to continue.

Bescent noted that small business owners might see higher tariff costs than what they previously anticipated from China. Uncertainty remains a significant factor affecting consumers and businesses as they plan for future expenses.

“Strategic uncertainty serves as a negotiation tactic,” Bescent explained, “as too much certainty could weaken our position in discussions with other countries.”

Bescent has made appearances on NBC’s “Meet the Press” and CNN’s “The State of the Union.”