Walmart Flags Inevitable Price Increases

Walmart issued a warning about upcoming price increases because of the Trump-imposed tariffs which reached 10% worldwide and 30% in China representing the most significant escalation since the 1930s. AP reports that CFO John David Rainey stated bananas now cost 54 cents per pound and car seats have increased by $100 since the price hike started in late April and will continue to rise until July. The US-China truce lowered tariffs to 30% and 10% but the costs have not decreased. The company generated $165.6 billion in Q1 sales (2.5% increase) and $4.4 billion in profits (12% decrease) from its US-sourced products that make up two-thirds of its total inventory. The executive team plans to protect food prices yet they have not provided Q3 guidance because of ongoing trade market instability. The majority of American consumers (60%) delay their purchases according to a Harris/Guardian poll because consumer spending drives US economic growth. The first-quarter economic decline of 0.3% introduces new uncertainties. The company maintains its long-term targets yet passes rising expenses to customers without significant customer loss but the economic environment poses challenges to its low-cost business model.