Walmart vs. Trump Administration (Tariffs)
If you have been watching the news lately, Walmart’s President and their Chief Financial Officer, announced they may have to raise prices shortly, because of increasing prices from their suppliers, due to tariffs, but that they would do their best to keep them at a minimum.
President Trump has chastised them, and made statements such as “Walmart should insulate their customers from price hikes” or “stop blaming tariffs as the reason to raise prices” or eat the tariffs.”
Anyone who has even a slight knowledge of finance or economics knows that if your cost goes up, unless you increase your prices, you will lose profitability. There comes a point, where your business could actually lose money, unless you do raise prices.
I took a look at Walmart’s financial information for the past two years. The following summarizes their sales (revenues) and net profit ( after all costs and taxes):
Year Year
Ended Ended
1/31/25 1/31/24
Revenue $680.985 Billion $648.125 Billion
Net Income $19.436 Billion $15.511 Billion
Net Income as
% of Revenue 2.8% 2.39%
Looking at these figures one could say, “wow” look how much their net income is. However, net income as a percentage of revenue, is low. That is because in the retail business, margins are very tight, and as a result, any change, small or large, can have a huge impact on their financial results.
As an example, here is the net income as a percent of revenue for some companies that everyone knows:
Apple 24%
Microsoft 36%
Berkshire Hathaway 21%
Target 3.8%
As you can see, Target is similar to Walmart, because they are both in the retail business. Apple and Microsoft are in technology, while Berkshire Hathaway is a “conglomerate” of many types of businesses.
If we assume that 50% of Walmart’s costs from suppliers are offshore, and subject to only 10% tariffs, and they pass that on to Walmart, then if Walmart does nothing, their costs would increase $25.587 Billion, and they would experience a loss of over $6 Billion, instead of a profit. That becomes unsustainable. Tariffs, in excess of 10% , only exacerbates the situation, depending on the % of imports.
Not increasing their sales prices on these imports would be irresponsible on Walmart’s management. President Trump’s comments are not only irresponsible, but unreasonable.
It appears that the present administration has failed to understand what a “Global Economy” is, and the negative impacts that tariffs can have. They make no sense to anyone. In the final analysis, it is the consumer that suffers, because they end up paying more for an item.
Jess Sweely
Madison, Va.
May 19, 2025
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