CEOs of Walmart and Target Warn of Increased Costs on Common Items Due to Tariffs, Predicting Even Greater Impact Than Price Increases
Warning Sounds Alarm for Retail Giants
Executives from Walmart, Target, and Home Depot have delivered a stern message to the White House - sweeping tariffs could lead to barren store shelves and increased prices within a matter of weeks.
In a private meeting with President Donald Trump, these CEOs voiced concerns about his aggressive trade policy, fearing it would wreak havoc on supply chains. According to them, it's a ticking time bomb for consumers.
"We had a fruitful session with President Trump and his team, and we were grateful for the chance to share our insights," Walmart mentioned, echoing Target's sentiments about the closed-door meeting on Monday.
These two titans, along with Home Depot, are particularly exposed to Trump's 145 percent tariff on China. Walmart imports around 60 percent of its goods from the Asian giant, whereas Target relies on Chinese imports for half its inventory.
Despite the big retail players having stockpiled inventory, it's expected to last only a few weeks. This leaves them with three options: swallow the costs, raise prices, or stop buying from Chinese suppliers - a choice that could result in empty shelves.
The bleak reality is that evidence shows US companies are already cancelling orders from China. Shippings from China to the Port of Los Angeles are down 64 percent in the first week of April, compared to the week before, according to port data.
Mexico was another victim of Trump's tariff frenzy, with Target admitting that tariffs will cause supply chain issues, particularly for grocery items imported in the winter. Walmart, on the other hand, has shared its intent to invest in pricing to combat the challenge.
The retail game, however, isn't just about enduring this hardship. Majors like Walmart aim to emerge from the trial stronger, with more customers in tow.
Inside Innovation at WalmartWalmart sees a golden opportunity to seize market share gains by delivering better pricing in the current economic climate. Historically, Walmart has gained momentum during downturns like the COVID-19 pandemic and the Great Financial Crisis, according to John David Rainey, the company's finance chief.
Walmart reported solid sales growth to end 2025, but profits are estimated to shrink in 2026 - a scenario not seen since the pandemic. Despite this challenge, Doug McMillon, Walmart’s CEO, remains optimistic, stating that the company can "play offense" and use tariffs as a reason to invest in lower prices.
The tariffs, currently at 145 percent on Chinese goods and 10 percent on most other countries, were anticipated, but their scale has come as a shock to the retail industry.
The Impact of TariffsThe upcoming U.S. tariffs are projected to hit consumers hard, with average annual costs estimated to surge by $3,800 per household under all 2025 tariffs, resulting in a 2.3 percent overall price increase [4]. Some categories like apparel could experience up to 17 percent price hikes [4].
Retailers may be forced to absorb these costs or pass them on to consumers, risking reduced spending amid already soft consumer sentiment [3]. The uncertainty also raises concerns about stockouts and the potential spoilage of meltable or seasonal goods due to delay in restocking [5].
Ultimately, the combined effect of these challenges could push retailers to accelerate onshoring efforts, although new U.S. production facilities would take years to offset current import dependencies [3]. In the short term, leaner inventories and higher prices seem inevitable [2][4].
- The CEOs of Walmart, Target, and Home Depot have warned the White House that the proposed tariffs could lead to empty store shelves and increased prices within weeks.
- Walmart and Target, in particular, seem vulnerable to Trump's 145 percent tariff on China, as they import around 60 percent and half of their goods from China respectively.
- Evidence shows US companies are already cancelling orders from China, and shipments from China to the Port of Los Angeles are down 64 percent in the first week of April compared to the previous week.
- With their existing stockpile expected to last only a few weeks, retail giants are facing a challenging trio of options: either swallow the costs, raise prices, or stop buying from Chinese suppliers.
- Walmart sees this situation as an opportunity to gain market share by delivering better pricing in the current economic climate, aiming to emerge from the trial stronger with more customers.
- The upcoming US tariffs, estimated to cause an average annual cost surge of $3,800 per household, are projected to hit consumers hard, with categories like apparel potentially experiencing up to 17 percent price hikes.
