President Donald Trump has lately turned up the pressure on America’s largest retailer, demanding that Walmart (WMT) absorb the costs of tariffs instead of passing them on to consumers.
"Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain," Trump posted Saturday on Truth Social.
"Walmart made BILLIONS OF DOLLARS last year, far more than expected. Between Walmart and China, they should, as is said, ‘EAT THE TARIFFS,’ and not charge valued customers ANYTHING."
The president’s remarks come as tariffs remain high even under the China trade truce, and retailers brace for higher import costs over the summer.
Treasury Secretary Scott Bessent later told reporters that Walmart CEO Doug McMillon had agreed to "eat" some of the tariffs, though he declined to specify how much.
Walmart has not yet commented on the statement.
Thin margins complicate Trump’s demand
Despite its size and scale, Walmart operates on razor-thin margins.
The company’s net profit margin has remained under 3% since 2016, with the most recent figure sitting at 2.75%, according to data from YCharts. That’s roughly in line with the broader retail industry, which averages around 3.1%, based on data from NYU Stern.
Economists say Trump’s demand is not only impractical but contradicts the broader goals of his trade agenda. "Asking Walmart to eat tariffs is like asking it to eat its rent or insurance," said economist Peter Schiff.
"Ironically, if the goal of tariffs is to reduce our trade deficit, the only way that will happen is if Walmart and other importers raise their prices."
"It’s higher prices that cause consumers to buy fewer imports, which is what reduces the trade deficit," Schiff added.
Trump warned Walmart not to increase prices because his tariffs increased the cost of their imports. Trump said Walmart should eat the tariffs. He might as well tell Walmart to eat its rent, wages, insurance, utilities, and all of its other costs too. Ironically, if the goal of…
undefined Peter Schiff (@PeterSchiff) May 17, 2025
Other economists second Schiff, warning that absorbing tariffs can actually undermine the stated purpose of imposing them.
Joseph Gagnon, senior fellow at the Peterson Institute for International Economics, said tariffs often end up hurting the country that imposes them.
Each 1-point hike in tariffs corresponds to a 0.45% decline in GDP, according to his analysis.
"In other words, tariffs are associated with increasing trade deficits," Gagnon wrote. "They reduce imports, but they also reduce the dollars needed to pay for them."
Walmart, along with other major U.S. retailers like Target (TGT) and Home Depot (HD), has warned that tariffs will push prices higher this summer.
Walmart CFO John David Rainey told CNBC last week that the company will "absorb some of the price increases," but that consumers will begin seeing higher prices as early as June.
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