While the stock market rallied on news that the U.S. and China agreed to a 90-day pause in their trade war, many business leaders aren’t celebrating.
That’s because the temporary truce hasn’t changed much; Tariffs are still high, and companies are bracing for the impact.
Walmart (WMT) CFO John David Rainey told CNBC last week that while he was “pleased with the progress” in reducing tariffs from April levels, they remain “too high.”
He said Walmart and its suppliers will absorb some of the extra costs but warned shoppers should expect higher prices starting in June.
“We’re wired for everyday low prices,” Rainey said, “but the magnitude of these increases is more than any retailer can absorb.”
Walmart isn’t alone. Ford (F) is already raising prices on several Mexico-made vehicles, and luxury brand Hermès is increasing prices across the board in the U.S.
Shoppers are worried about inflation
Consumers are starting to feel the pinch.
The University of Michigan’s latest consumer sentiment survey dropped to 50.8 in May, down from 52.2 in April, the second-lowest reading since June 2022.
The report found more Americans worried about tariffs driving up inflation.
David Kelly, chief global strategist at J.P. Morgan Asset Management, pointed out that the survey polls just 250–300 people, calling it “not as bad as it looks.”
But he warned that consumers can only handle so much, especially as tariffs bite, student loan payments resume, and government job cuts take effect.
“If you squeeze them enough,” Kelly said, “the economy will begin to slow.”
The Hershey Company (HSY) is already preparing for higher costs. CFO Steve Bockel said on the company’s earnings call that tariffs could cost Hershey up to $100 million each in Q3 and Q4, mostly from higher cocoa prices and Canadian retaliation.
Major retailers Home Depot (HD), Lowe’s (LOW), and Target (TGT) will report earnings this week, offering a clearer look at how consumers are coping with tariffs so far.
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