Time is running out for Walmart shoppers looking to avoid higher prices on everyday products. On Thursday, the retail giant announced that customers can expect a rise in prices as a result of escalating tariffs imposed by President Donald Trump, which they described as being “too high.” During an earnings call, Walmart CEO Douglas McMillon stated, “We will do our best to keep our prices as low as possible. But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure, given the reality of narrow retail margins.”
The price changes are expected to take effect by the end of May, with Walmart’s finance chief, John David Rainey, indicating that prices will increase “much more” in June. With more than 4,600 stores across the United States, Walmart sources products from various countries, including Canada, China, India, Mexico, and Vietnam. These countries are subjected to tariffs that start at 10%, while imports of steel, aluminum, cars, and auto parts face tariffs as high as 25%.
“All of the tariffs create cost pressure for us, but the larger tariffs on China have the biggest impact,” McMillon explained. Recently, Trump increased tariffs on most Chinese goods to an astonishing 145%. However, this rate dropped to 30% as part of a temporary truce with China, which is set to last 90 days. Despite this reduction, Trump warned that tariffs could become “substantially higher” if a trade agreement is not reached soon. Other nations are also negotiating with the U.S. during this pause, with Commerce Secretary Howard Lutnick stating that baseline tariffs will not drop below 10% during negotiations.
Economists have warned that these tariffs will disproportionately affect lower- and middle-income Americans, who are typically Walmart’s primary customers. Many consumers rely on the retail giant for essential purchases, particularly groceries. The ongoing trade war has negatively impacted consumer sentiment, as evidenced by a 2.7% drop reported by the University of Michigan between April and May, signaling growing fears of a potential recession.
“Food inflation is very much on our mind,” McMillon noted, mentioning that staple items like bananas, avocados, and coffee are imported from countries such as Colombia, Costa Rica, and Peru. The U.S. also imports various vegetables and fruits, including beets, cabbage, melons, and pineapples from Costa Rica. While Walmart has not disclosed the exact potential increases in prices for fruits and vegetables, McMillon stated, “We’ll do our best to control what we can control in order to keep food prices as low as possible,” hinting at efforts to minimize fresh food waste.
According to the Bureau of Labor Statistics, the average price of bananas per pound has risen by approximately 2 cents at U.S. retailers between February and April, highlighting the effects of inflation on food products.
As the summer shopping season approaches, Ryan Monarch, an assistant professor of economics at Syracuse University, remarked that seasonal and holiday purchases cannot be postponed for months while the trade war unfolds. Walmart is currently focusing on back-to-school shopping, and McMillon clarified that tariffs are incurred as soon as a product enters the country, meaning that the impact of higher tariffs is already being felt.
“What we’re looking at is upward pressure that began in April and will persist throughout the year on imported goods,” McMillon stated. This could complicate pricing strategies for upcoming holidays like Halloween and Christmas as estimating tariff costs becomes increasingly challenging.
Products such as toys and electronics, particularly those made in China, are expected to see significant price increases. McMillon revealed that about 80% of toys sold in the U.S. are manufactured in China. Companies like Hasbro and Mattel have already indicated that certain items may be removed from their portfolios due to rising costs associated with tariffs. “Well, maybe the children will have two dolls instead of 30 dolls,” Trump commented, recognizing the potential impact of tariffs on toy prices.
Research from Telsey Advisory Group has shown that the price of a Barbie doll sold at Walmart’s competitor Target spiked by 42.9% over a week in mid-April. Additionally, gaming products are also expected to rise, with estimates suggesting that the price of Nintendo’s Switch 2 could increase from $450 to around $600, while the new Apple iPhone 17 may exceed $1,000 instead of the anticipated $799.
Childcare products, including strollers, clothes, car seats, and formula, could also face price hikes, as about 90% of children’s gear is exclusively manufactured in China. Experts suggest that despite potential price increases, consumers will likely continue to purchase these essential items.
In 2024, China exported over $438 billion worth of goods to American households, with nearly 19% of that total consisting of machinery and mechanical appliances. Additionally, 4% of last year’s imports from China were focused on bedding, furniture, and lighting. Rainey noted that general merchandise sales, including electronics and home products, have slightly declined during the first quarter.
Unlike groceries and baby gear, home goods are often seen as non-essential, leading consumers to delay purchases of durable goods such as cars and appliances. “Consumers are very worried, and they are postponing their purchases,” Monarch added. However, Walmart has been proactive by increasing imports before tariffs took effect, allowing them to stockpile products that have a longer shelf life.
