From what the CEO of WalMart says, prices are likely to go up soon.
The huge chain gets almost all of its goods from China, which is one of the countries that President-elect Trump is likely to target with tariffs.
He told CNBC, “We never want to raise prices.” John David Rainey, CFO of Walmart. “Every day we have low prices.” There will probably be times, though, when prices go up for consumers.
Data put together by the Alliance for American Manufacturing shows that 70% to 80% of Walmart’s suppliers are from China.
Trump said during the campaign that he would put a “universal tariff” on all imported goods that would be between 10% and 20% and one that would be 60% or more for goods from China.
Also, on November 25, the president-elect said that one of the first things he would do as president on January 20 is put a 10% tariff on China and a 25% tariff on Canada and Mexico.
Rainey told CNBC that he could not say in public which products’ prices might go up.
“We want to work with our suppliers and our own private brand line to try to get prices down,” he said.
A new era of ‘reflation?’
Politico reported that the talk of tariffs has Wall Street buzzing with the word “reflation,” which means that prices may be going up again soon, at a time when people have just barely recovered from the decades-high inflation they had to deal with in 2022 and 2023.
According to the government, the United States brought in $3.1 billion worth of goods in 2023. Trading Economics says that electronic equipment, machinery, cars and trucks, petrol and diesel, and pharmaceutical products are some of the things that are imported the most.
Many of these are likely to be affected by the tariffs that Trump has promised to put in place when he takes office.
And it might have a bigger effect on some industries than others. The American Fuel & Petrochemical Manufacturers say that the U.S. imports 40% of the crude oil that is refined in the country. That oil is turned into petrol, which Americans use to power their cars, heat their homes, and make electricity.
These goods mostly came from Canada and, to a lesser extent, Mexico. The United States trades a lot with both of these countries and is a member of the Canada-U.S.-Mexico Agreement, which replaced the North American Free Trade Agreement (NAFTA).
That deal was renegotiated in a series of tense meetings during Trump’s first term, but not before the president put a 25% tariff on steel imports and a 10% tariff on aluminium imports, including goods from North American neighbours.
In the end, tariffs were lifted on both Canada and Mexico. However, Trump has made it clear that he plans to quickly put a 25% tariff on their goods if they do not change how they handle the border, so that is likely to end.
Who ends up paying the cost
Trump says that tariffs will help American businesses, but some business leaders are worried that it will not work out that way.
When Trump put tariffs on aluminium and steel in 2018, jobs in the steel industry dropped by 7,100 between 2019 and 2021. They did not start to go back up until the tariffs were replaced with a quota system.
Also, the Tax Foundation says that Trump’s proposed tariffs could bring in $1.2 trillion in tax revenue. But they could also cost the country 344,900 jobs and 0.4% of its GDP.
Many studies have shown that consumers will likely have to pay the most for these tariffs in the long run. In fact, Rainey is not the only business leader in the U.S. getting people ready for higher prices because of the proposed tariffs. In a recent earnings call, Best Buy CEO Corrie Barry is said to have said that electronics could cost more.
Barry told investors that if the company has to pay more for goods from those three countries, “our customers will have to pay for it.” He also said, “There is very little in the consumer electronics space that is not imported.” “People need these things, and the prices going up will not help,” she said.