Walmart Just Leveled Up to Americans: China Won't Pay for Trump's Tariffs, and in All Likelihood, You Will

Voters who brought Donald Trump back to the Oval Office in hopes that the cost of living would return to its levels of the halcyon days before the pandemic may be in for a shock.

Arkansas-based Walmart, the world's largest retailer that traditionally caters to working- and middle-class Americans, warned that the president-elect's plans to raise import duties across the board would be felt by ordinary consumers.

The prices are going to be inflationary, there's no doubt about it, Walmart Chief Financial Officer John David Rainey told Fox News on Thursday.

That, however, is not the message the Trump campaign took to the nation during the 2024 election campaign. During the campaign, the former president questioned whether voters were better off than there is. just under five years ago, when the seeds of inflation were sown with the COVID-19 outbreak.

The categorical answer was no, since two-thirds of the population were dissatisfied with the state of the economy. From coast to coast, Americans felt deep resentment over soaring prices on everything from gasoline to groceries to restaurant visits.

Trump calls tariffs a tax on foreign countries without downside

Enter the Trump campaign, which repeatedly touted tariffs as a panacea. They would fill the nation's coffers, reduce the deficit, bring back manufacturing jobs and possibly even eliminate the need for income taxes. And the costs? Well, those costs would be borne by others, primarily China, the United States' strategic rival, which could face tariffs of up to 60% on the goods it exports.

A tariff is a tax on a foreign country, that's the way it is whether you like it or not, Trump promised his supporters at an August rally in the key battleground state of Pennsylvania. It's a tax on a country that is ripping us off and stealing our jobs.

The National Retail Federation, however, disagrees. Unless exporters are both willing and able to lower their ex-factory prices in order to maintain volumes, the costs will be borne entirely by Americans, either directly in the form of import duties or indirectly through higher prices passed on to the customer, or a combination of both.

A tariff is a tax paid by the U.S. importer, not a foreign country or the exporter, NRF Vice President Jonathan Gold said in a statement released a day before the November election.

Advantages and disadvantages of tariffs

Limited tariffs targeted at strategic economic sectors vital to national security, for example, may make sense, and every country imposes duties in one form or another. Some may intervene indirectly by requiring compliance with certain regulations in order to protect domestic sectors such as agriculture and farming.

And while economic incentives such as tax breaks can encourage migrant manufacturers to relocate their factories, tariffs can also be effective.

Yet they can also cause these producers' downstream businesses to shrink as they face higher costs. As a result, they may inadvertently lead to job loss in the United States when all effects are neutralized.

Even for U.S. products that require no foreign inputs, tariffs can also be inflationary to the extent that they incentivize domestic suppliers to raise prices simply to increase shareholder profits. Finally, they can trigger a retaliatory trade war if nothing is done to control them.

Walmart warns: we are not immune and costs will be passed on

This is why most industrialized countries have traditionally followed economic orthodoxy in seeking to dismantle tariffs, specializing instead in goods and services where they have a competitive advantage.

The resulting era of globalized and highly efficient supply chains has driven down prices for many products, flat-screen televisions being an oft-cited example.

This situation could come to an abrupt end if Trump imposes blanket tariffs on all imported products ranging from 10% to 20%.

Walmart Chief Financial Officer Rainey said the major retailer will do everything it can to soften the blow, but that pain is inevitable.

We're going to work with our suppliers as well as our own private label assortment to continue to try to bring prices down for customers, he told Fox News. But we are not immune, and prices will be inflationary for customers.

How separated are you from the most powerful business leaders on the planet? Find out who's on our brand new list of the 100 Most Influential People in Business. Plus, learn the measures we used to achieve this.

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