Walmart May See Higher Prices Because of Trump’s Tariffs

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As the trade war between the United States and China continues, we may expect to see higher prices from retailers.

According to former Walmart U.S. CEO Bill Simon, Walmart as well as other retailers will start to hike prices soon to respond to President Trump’s tariffs on Chinese goods.

“So far, Walmart’s been able to absorb a lot of the pricing, and the question is how long can they do that and whether they actually should,” said Simon on CNBC’s “Closing Bell.”

Hundreds of retailers have been pushing back against the tariffs, including Walmart, and have written letters to U.S. Trade Representative Robert Lighthizer.

“As the cost of goods go up in any other way or any other model, the costs are mitigated and they are passed through … You’ll see Walmart start to do that soon,” said Simon.

President Trump recently announced 10 percent tariffs on $200 billion in Chinese goods. The duties will rise to 25 percent on Jan 1. China then retaliated with tariffs on $60 billion worth of American products.

Walmart warned in its letter to Lighthizer that it may hike prices on a wide range of products, including food and personal care items.

“As the largest retailer in the United States and a major buyer of U.S. manufactured goods, we are very concerned about the impacts these tariffs would have on our business, our customers, our suppliers and the U.S. economy as a whole,” the letter read.

Target also sent its own letter where it said it was “deeply troubled” by the trade war between the two countries.

“The prices have to be passed through eventually, and I think most retailers are starting to make plans to do that,” Simon said.

He added that “for tariffs to have any effect at all the consumer has to feel it and change their buying behaviors so that then retailers and manufacturers would change.”

Disclaimer: We have no position in Walmart Inc. (NYSE: WMT) and have not been compensated for this article.