Walmart Announces Price Increases Due To Tariffs
Despite mounting warnings, ominous surveys, and breathless speculation, the hard economic data from April shows a U.S. economy that is, for now, holding firm—if not surprisingly resilient—in the face of escalating trade tensions and tariff uncertainty. Retail sales remained steady, inflation cooled further, and wholesale prices actually dropped. But underneath that calm surface, storm clouds may be forming. At the center of the coming turbulence? Tariffs—and the growing signals that their cost will soon be passed to consumers.
For all the anxiety around trade policy, April offered a reality check. The Producer Price Index (PPI) fell 0.5%, its steepest monthly drop in five years, while core PPI (excluding food and energy) also declined by 0.4%. Retail sales nudged up by 0.1% after a blockbuster March, which saw a 1.7% jump revised upward from initial estimates. Restaurants and bars posted a strong 1.2% increase, suggesting that consumers are still willing to spend on services even as goods consumption levels out.
Meanwhile, the Consumer Price Index (CPI) rose just 2.3% year-over-year—marking the smallest increase since early 2021. Economists had expected higher readings in light of President Trump’s tariffs on imported goods from China, Canada, Mexico, and beyond. Yet none of the major indicators reflect the kind of economic blow that was forecasted.
If a retailer as big as Walmart can’t escape the pain of tariffs, what chance does a small business have?
Their customers are inevitably going to see prices rise.
Donald Trump’s tariffs are nothing more than a tax hike on consumers.
— Chuck Schumer (@SenSchumer) May 15, 2025
But if the numbers look good on paper, the voices from the business trenches tell a more complex story. Walmart CFO John David Rainey issued a stark warning: the price pressure from tariffs is reaching a breaking point.
“It’s more than any supplier can absorb,” Rainey told CNBC. “And so I’m concerned that consumers are going to start seeing higher prices... certainly much more in June.”
Walmart, known for its razor-thin retail margins and power to pressure suppliers, now says it cannot shield customers from higher costs. That's especially concerning given Walmart’s ability to weather price shocks better than most due to its massive supply chain and domestic sourcing (60% of its products are groceries, primarily U.S.-sourced). If Walmart can’t hold the line, smaller retailers don’t stand a chance.
President Trump’s tariffs—originally as high as 145% on Chinese goods—have recently been scaled back to 30% following a temporary de-escalation in the trade war. China reciprocated by slashing its retaliatory tariffs. But for businesses, the damage is already being felt. Production shifts, supplier re-negotiations, and hedging strategies don’t happen overnight.
Retailers like Mattel and Amazon have also been caught in the crosshairs. Amazon reportedly scrapped plans to label tariff-related cost increases on its website after the White House condemned the move as “hostile and political.” Mattel faced similar pressure after announcing price hikes.
The Trump administration continues to play hardball, warning companies that price increases could provoke tariff retaliation—or even personal rebukes from the President himself. The resulting political risk is now part of corporate strategy, not just economic planning.
Despite the favorable snapshot, analysts remain cautious. ING’s James Knightley noted that tariffs haven’t caused inflation—yet—but that the current squeeze on business margins is unsustainable. BMO’s Sal Guatieri echoed that view, saying it’s likely just a matter of time before the costs filter down to consumers.
And therein lies the paradox: The U.S. economy is showing strength in the face of aggressive trade policy. But that strength may be deceptive. Beneath the surface, companies are shifting strategy, cutting products, and warning of sticker shock to come.