Walmart warned Thursday that rising tariffs under President Trump’s trade policies will lead to higher Walmart consumer prices, especially for imported food and general merchandise, despite the retailer’s efforts to shield shoppers.
The caution came during the company’s first-quarter earnings call for fiscal year 2026. CEO Doug McMillon and CFO John David Rainey described a strong quarter. Still, they emphasized growing concern over cost pressures linked to U.S. tariffs, especially those targeting Chinese goods and Latin American produce.
Tariffs will Result in Higher Walmart Consumer Prices
“Even at the reduced levels announced this week, we aren’t able to absorb all the pressure,” McMillon said. “Given the reality of narrow retail margins, higher tariffs will result in higher prices.”
He pointed to the resurgence of tariffs on goods from China—where Walmart sources many electronics and toys—as particularly impactful. Tariffs on agricultural products from Costa Rica, Peru, and Colombia also drive up costs for bananas, avocados, coffee, and roses.
Although Walmart sources two-thirds of its U.S. assortment domestically, McMillon said the share of imports, especially from China, remains significant in specific categories.
Managing Inventory and Mitigating Impacts
Walmart is adjusting inventory flows and working with suppliers to switch from tariff-affected materials—like aluminum—to alternatives such as fiberglass. The company also aims to manage costs by absorbing some tariff impacts within product categories, rather than applying the full increase item by item.
“We can adjust the forecast and partner with our suppliers over time,” McMillon said. “It’s helpful that our inventory is well-managed going into Q2.”
Walmart is leveraging its growth businesses in eCommerce, advertising, and memberships with higher margins to offset cost increases and limit the impact on Walmart consumer prices.
Solid First Quarter Results
Despite tariff concerns, Walmart reported a strong first-quarter performance. Companywide sales grew 4%, with profits up 3% in constant currency. U.S. comparable sales rose 4.5% for Walmart and 6.7% for Sam’s Club, excluding fuel. eCommerce sales jumped 22% globally.
McMillon credited these results to Walmart’s broad, replenishable product assortment and improving profitability in newer business segments.
“We delivered a good first quarter,” McMillon said. “Our strategy and omnichannel capabilities are strong. We’ll keep getting better in terms of assortment, delivery speed, and scaling our newer businesses.”
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CFO Flags Uncertainty in Forecasts
CFO John David Rainey echoed McMillon’s cautious optimism, but said that trade policy unpredictability adds risk to the company’s financial outlook.
“The range of possible outcomes is much greater than when we originally provided our annual guidance,” Rainey said. He warned that if higher tariffs are restored, they could jeopardize Walmart’s ability to grow earnings year over year.
Nonetheless, Rainey said Walmart remains confident it can meet full-year guidance under most scenarios the company has modeled, including those that assume bilateral agreements will reduce tariff burdens.
“We’re not fully immune, but we’ve modeled various outcomes and still see a path to achieving our goals,” Rainey said.
Positioned to Absorb Pressure—But Not All of It
Both executives stressed that Walmart’s scale, domestic sourcing, and diversified revenue streams give it an edge in managing rising costs. But McMillon acknowledged limits.
“We’re positioned to manage the cost pressure from tariffs as well or better than anyone,” he said. “But even at the reduced levels, the higher tariffs will result in higher Walmart consumer prices.”
As the second quarter progresses and more tariff-affected inventory hits stores, customers may begin to feel the effects, especially in general merchandise. Walmart pledged to keep food prices as low as possible, even sacrificing margin in other areas. However, the longer tariffs remain elevated, the more pressure builds.