Walmart announces price increase due to tariff costs

Walmart announces price increase due to tariff costs

Walmart , the largest retailer in the world, has warned that he is not immune to the customs duties of President Donald Trump. The company plans to increase the prices for some articles, since Trump's global trade wars drive up the costs of the company.

price increases announced

"We will do our best to keep our prices as low as possible, but given the size of the tariffs, even at the reduced prices this week, we are unable to cushion the pressure completely because the retail margins are very thin," Walmart CEO Doug McMillon will say with analysts on Thursday. Walmart had published several prepared statements by managers before the conference.

The price increases should begin later this month. "I am worried that consumers will soon see higher prices. You will probably notice this at the end of the month and certainly much more in June," said Walmart Finanz chief John David Rainey in a Interview with CNBC on Thursday.

background of the customs increase

Many companies have increased prices to alleviate costly consequences of the 10%general tariffs on all products that are introduced to the United States, as well as higher taxes on Chinese goods. Washington and Beijing have achieved an agreement to reduce these tariffs this week, but the United States continues to raise a 30%transfer to most import goods from China.

Zölle have already raised the prices for mattresses, toys, strollers and other products. The Federal Reserve announced last week that the tariffs led to a price increase of 0.3% this year. Some companies increase prices for their entire product range, while others specifically adapt articles in their catalogs. Many companies simply choose products that lead to high price shocks out of the range instead of trying to sell at prices, do not want to pay for customers or who are undercut by competitors.

political implications for Walmart

price increases could bring Walmart into an unpleasant location with Trump. Companies usually communicate why they have to increase prices, but Trump has made this a political risk. The White House has , After the company had considered to display the additional costs caused by tariffs on some products. Trump contacted Amazon founder Jeff Bezos to talk about the plans of the website, and white house spokeswoman Karoline Leavitt described Amazon's plans as a "enemy and political act" while she held a picture of Bezos in front of the cameras. Trump also threatened Mattel after the toy manufacturer had announced that to increase from tariffs, and said in the Oval Office that he could raise a 100%customs on the company's toys and recommended that the company should drop its CEO.

Walmart in the middle of the trade war

Despite the tariffs and the fears of a recession, Walmart remains strong in the United States. The sales figures in shops that have been open for at least one year rose by 4.5% in the last quarter, driven by the company's grocery store. Walmart stated that he won wealthier households in the last quarter.

The shares of Walmart ( wmt ) rose by 2%in pre -interconnecting trading. Walmart's investments have contributed to the fact that the company has won more powerful buyers in recent years. Historically, Walmart's main customers were Americans with low and medium -sized incomes.

Although Walmart is considered a traditional retailer, the company has been one of the strongest retailers in America for several years. It successfully managed the transition to online shopping and built up a competitive online business that competes with Amazon.

Analysts believe that the company can use its size and broad supplier base to keep prices low for customers, even if the tariffs increase the costs. This could help Walmart win market shares towards competitors in the coming months.

Walmart is "well positioned to deal with tariffs", given the low relationships with the suppliers, low prices and other strengths. The company sells fewer products from China - about 15% of its total articles - than most retailers, so it is less affected by tariffs.

About 60% of Walmart's products are foods that are mainly related in Germany.

The challenges of the retail industry

The tariffs represent an enormous challenge for the retail industry. Most toys, baby items, sneakers and many other everyday products are produced in China, and companies are in the process of shifting production. Companies increase the prices for consumers, cut products and take other measures to minimize the effects of tariffs.

Last month, the CEOs of Walmart, Target and Home Depot met with Trump to discuss the effects of the tariffs. Walmart CEO McMillon, who developed a friendly relationship with Trump through meetings in Mar-A-Lago and several friends, told President that the trade war with China had already started to disturb the supply chain and that the situation was only tightened by summer, as CNN already reported.

Walmart said on Thursday that the uncertainty in retail planning makes planning difficult for the future. "The ambiguity that exists in today's dynamic business world makes it extremely difficult to predict the very close future."