Walmart made the rare move recently of warning customers, and investors, that it will begin raising prices as the result of tariffs.
The retail giant said even with recent reductions in tariffs, it still had no choice but to pass some costs onto consumers.
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Other companies have also warned consumers, such as Procter & Gamble and Hasbro, but some experts say it will be less obvious. Amazon said it considered displaying import charges (like Chinese retailer Temu) but ultimately decided against it.
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There was some blowback to Walmart’s announcement, with some of President Trump’s most ardent supporters accusing the company of greed and using tariffs as an excuse.
Question: Did Walmart make the right move warning customers about higher prices?
Economists
David Ely, San Diego State University
YES: Walmart operates in a competitive retail market so fully absorbing the costs arising from higher tariffs is not a realistic response. With advance warning, customers will have a chance to purchase items in advance of the price increases. Knowing of Walmart’s plan to increase prices, retail rivals are more likely to also pass through the higher tariffs to their customers. If rivals follow Walmart’s lead in raising prices, Walmart will lose fewer customers.
Ray Major, economist
YES: There is no harm in Walmart announcing that their prices are going to increase. With 60% of Walmart’s products being sourced from China, tariffs will definitely impact their bottom line. However. the announcement itself seems politically motivated with the intent being to influence policymakers to push for a reduction in tariffs or a more balanced trade deal with China. It is also a reasonable business tactic on Walmart’s part.
Norm Miller, University of San Diego
YES: Consumers appreciate transparency and forewarning. Economists have been warning for several months that consumers must bear the brunt of tariffs. Walmart can not be expected to sell goods at cost when overhead, rent, labor and returns to capital are required to stay in business. Margins must be retained. Some retailers and car dealers have not yet raised prices on existing inventories, so stocking up or buying ahead might result in a good payoff.
Caroline Freund, UC San Diego School of Global Policy and Strategy
YES: People believe the false narrative that China pays the tariffs. In fact, tariffs are charged to the importer when goods pass through customs. Only if the exporting company lowers prices are tariffs absorbed in foreign countries like China. Otherwise, tariffs are either paid by companies like Walmart in lower markups or by consumers in higher prices. At some point, companies cannot absorb the additional taxes and they will be passed on to the customer. Better to be transparent about it.
Kelly Cunningham, San Diego Institute for Economic Research
NO: Walmart is using tariffs as a mask for general increases in prices actually resulting from engineered expansion of the money supply. To compensate for massive spending, the federal government increases the money supply and expands debt in effort to finance for the excessive deficit, instead of politically challenging method directly raising taxes. The result is general increases in price inflation on goods and services, which Walmart and other businesses attempt to pass on to their customers.
Alan Gin, University of San Diego
YES: It’s estimated that 60% or more of all products at a typical Walmart are produced in China. The tariffs on Chinese products have been reduced but remain high at 30%. With a net profit margin of less than 3%, Walmart has no choice but to pass the higher prices on to consumers. The warning allows customers to prepare for the increases. The items most impacted will be electronics, toys, food, and clothes, with the Yale Budget Lab forecasting a 14% price increase in the latter.
James Hamilton, UC San Diego
YES: Walmart is running a business, not a charity. If their costs go up, they have to charge customers a higher price. Their announcement is a warning not just to their customers but also to the president. Walmart is laying its cards face up on the table, letting everyone know the hand they’ve been dealt and the only way it can be played. President Trump would be wise to heed the warning rather than try to bluff or bully his way past it.
Executives
Bob Rauch, R.A. Rauch & Associates
YES: Walmart’s decision to warn customers about higher prices is a strategic move to maintain transparency and manage expectations. The company cited increased costs primarily due to tariffs on imported goods. In essence, Walmart is preparing shoppers for potential price hikes on various items; they believe this will help maintain customer trust. It remains to be seen if this move influences consumer behavior, but it shows an attempt at industry leadership.
Austin Neudecker, Weave Growth
YES: Informing shoppers about tariff-driven price hikes seems fair. Walmart’s low-price model famously relies on tightly managed costs. Even slight changes will have a large impact on profitability. Transparency builds trust, reduces backlash, and clarifies that tariffs beyond their control, not greed, are driving inflation. By exposing the policy as the culprit, Walmart shifts customer ire towards the true source. Such candor pressures policymakers to rethink arbitrary and volatile trade barriers for an inflation-sensitive electorate.
Phil Blair, Manpower
YES: And thousands of other companies that import raw materials, food, parts, or products should be doing to same thing. The tariffs will be passed along to consumers for any product other than ones with outrageous profit that can absorb the increased costs. This will be very rare and consumables need to take this tariff war very seriously. They will be directly affected by the price increases and the resulting inflation.
Gary London, London Moeder Advisors
YES: I believe in complete transparency. When the market is disrupted by government imposed taxes, it is entirely appropriate to demonstrate the extent of those tariffs at checkout. In fact, I would argue that it would be wrong to not enlighten customers just what the Trump tariffs are costing them. It’s really one of the only ways to retaliate from terrible public policy. I recommend that all businesses broadcast this economic burden.
Chris Van Gorder, Scripps Health
YES: Absolutely. Transparency and honesty are both warranted and appreciated. We need more of both these days. There are consequences of tariffs and that is higher costs — a hidden tax. There are consequences of many other pieces of legislation at the national, state and local levels as well. I’d love to see more honesty and transparency there, too.
Jamie Moraga, Franklin Revere
YES: Walmart made a business decision to be upfront about rising prices and the reasons behind them. Now, it’s up to shoppers to compare prices and make smart choices as, unfortunately, consumers are feeling the impact of both government and corporate decisions. If Walmart’s prices are higher than competitors, customers will look elsewhere for better deals. Should sales decline as a result of this decision, Walmart may have to reconsider and adjust their pricing strategy.
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