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Walmart has warned customers to expect higher prices despite the recent deal between the US and China to reduce punitive tariffs imposed in Donald Trump’s trade war.
The world’s biggest retailer is particularly exposed to the US president’s trade war. China and Mexico are its largest sources of imports, which in total make up a third of its US merchandise.
Washington and Beijing agreed this week to a cut in tariffs for 90 days, with Washington temporarily slashing tariffs on Chinese imports to about 40 per cent, from as high as 145 per cent.
Doug McMillon, Walmart’s chief executive, said the reprieve was not big enough to ward off future price rises.
“We will do our best to keep our prices as low as possible but given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins,” he said in prepared remarks.
McMillon was among the retail bosses to argue against tariffs at the White House, warning Trump of higher prices and empty store shelves.
The first quarter of the year spanned a volatile time for the US economy, as Trump swiftly imposed and changed tariffs on its trading partners. The 145 per cent tariff on China took effect on April 9.
The warning from McMillon came as Walmart reported a 4.5 per cent annual increase at comparable sales at its namesake US business in the first quarter, surpassing the 3.7 per cent rise forecast by Wall Street analysts, according to a Visible Alpha poll.
The retailer maintained its financial guidance for the full year, which includes a projection of 3 to 4 per cent growth in net sales. However, it withheld guidance on profits in the second quarter, citing the uncertain trade picture.
