Walmart’s longstanding pledge to keep prices as low as possible may be reaching its limits as the retailer faces steadily rising costs - pressuring not just its business but also the broader consumer economy, where most competitors lack Walmart’s scale to absorb such increases.
On the company’s most recent earnings call, CEO Doug McMillon described the impact of tariffs as “gradual,” but acknowledged that costs are climbing week by week as new inventory flows in. He warned shareholders that these pressures are likely to persist through the second half of the year.
Back in April, Walmart reaffirmed its commitment to holding down prices despite tariffs, while conceding it is “not immune” to rising expenses.
Thanks to its massive scale, the company can sustain price discipline longer than its rivals. If Walmart is feeling the strain, other retailers are almost certainly in equal or greater distress.
As the world’s largest retailer, Walmart wields enormous buying power, enabling it to negotiate lower supplier prices. Its expansive supply chain and logistics network further reduce per-unit costs.
Coupled with its “everyday low prices” strategy, the company is fundamentally designed to compete on cost, though even it may not be able to hold the line indefinitely.
Tariff costs are already ripping through the economy
Goldman Sachs estimates that, through June, U.S. companies absorbed 64% of tariff-related costs, with 22% passed on to consumers and just 14% borne by foreign exporters.
That means shoppers have yet to feel the full weight of higher prices, but it may only be a matter of time before those costs reach them.
Harvard economist Alberto Cavallo echoed this view in comments to Bloomberg, noting that while companies are still shouldering most of the burden, they will almost certainly pass more of it on to consumers in the near future.
Price increases are already emerging in specific consumer categories. Paola Llama, a research fellow at Northwestern University, said tariffs have driven up costs “particularly in goods such as furniture and electronics,” much of which is imported from China.
Supply chain disruptions are compounding the impact.
Economics professors Maria José Carreras-Valle of Pennsylvania State University and Alessandro Ferrari of Universitat Pompeu Fabra argue that delays tied to tariffs and global logistics bottlenecks could deliver a double blow: higher production losses for companies and rising prices for consumers.
“The rise in delays and tariffs had an output loss of 7.3% and a price increase of 1.8%,” the economists wrote in an academic paper published in January.
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