Walmart’s Escalated Expenses Amid New Trade Regulations
In recent discussions, the Secretary of the Treasury submitted that popular retail giant Walmart would be faced with elevated expenses due to the introduction of new duties on foreign entities. His frank admission on the increased burden for businesses as a direct result of the ongoing trade conflicts marks a critical point of conversation. Recognizing Walmart’s situation, the government official acknowledged, that much like the description given, the retailer is, to some extent, absorbing the tariffs, which signifies an escalation in their operating costs due to new financial regulations.
Notably, this is a shift from his previous stance where he was steadfast in asserting that the setting up of new rules would not result in increased charges for the end-consumer. He was earlier noted for firmly stating that the payment for these new import charges would fall on China, considering the country largely operates on the business model of exporting their products to override inflation.
His earlier words were, ‘China, facing its own economic challenges, would ultimately bear the cost of these tariffs, as they try to export their way out of the looming inflation. They will be absorbing whatever additional tariffs come their way.’ However, he did accept that businesses are undergoing the burden of elevated costs. Although, he refrained from outright acceptance that this increase in cost is being transferred onto the American consumers.
When further pressed to remark on this point, he asserted that the Federal Reserve Bank remains unpersuaded that tariffs are a determinant of future inflation. He reminded everyone of the economists’ predictions about the inflation rise due to tariffs being met with some level of uncertainty by the Federal Reserve. In his own words, ‘The Federal Reserve is hesitant to draw the conclusion that tariffs will lead to inflation; they prefer to remain unsure of this and maintain a wait-and-watch stance.’
These fresh statements follow Walmart’s recent announcement where it declared that it would need to inflate its prices to compensate for the heightened supply costs, a direct repercussion of the continuing trade conflicts. Sending shockwaves through the market, the retail giant became one of the first to publicly acknowledge and act on the impact of the trade wars on their operations.
The President, in response to this declaration by Walmart, has firmly stated that the retail giant should cease to use tariffs as a scapegoat for their decision to increase prices across their various outlets. His public post expressed a clear mandate that both Walmart and China must absorb the tariff costs, and not transfer these onto the customers. The president said, ‘This additional burden should not be passed onto our valued customers. I’ll be watching, as well as your customers.’
This admonishment from the President has sparked reactions, including ridicule from members of his own political party. A particular criticism came from a former Congressman of the GOP, who labeled the President’s declarations as immature and his actions as those of a feeble loser.