Walmart Warns of Price Hike Amid US-China Trade Tensions
The impact of tariffs on retailers and consumers is becoming increasingly evident, with Walmart and other retailers warning of price hikes. As the US and China navigate their trade relationship, the effects of tariffs on the economy and consumers will be closely watched.
US stocks are poised for a fifth straight weekly win as trade tensions between the US and China ease, but retailers like Walmart are warning of price hikes due to tariffs, contradicting President Trump's promise of lower prices.
The S&P 500 futures moved up 0.4% on Friday, with the Dow Jones Industrial Average and Nasdaq 100 also advancing 0.4%, as investors eye a looming vote on President Trump's tax and spending bill. However, despite the positive market trend, retailers are feeling the impact of tariffs, with Walmart's CEO Doug McMillon stating that higher tariffs will result in higher prices for customers.
The Producer Price Index (PPI) has shown a dip in wholesale prices, but this is due to companies absorbing the costs of tariffs, rather than passing them on to consumers. However, as inventory levels wind down, the more-expensive goods ordered after April 2 will hit the shelves, leading to higher prices. Consumer spending data for April was barely positive, rising 0.1% year-over-year, indicating that consumers are starting to feel the impact of tariffs.
Economists are warning that the tariff "pain" is now affecting revenues and profit margins for firms, and that prices are likely to continue rising. Jamie Dimon, CEO of JPMorgan Chase, has stated that he does not expect the US to avoid a recession in 2025, and that the country's status as a financial safe haven is not guaranteed. Federal Reserve Chair Jerome Powell has also warned that the US may be entering a period of more frequent and persistent supply shocks.
As the trade tensions between the US and China continue to unfold, consumers can expect to see higher prices on goods, despite some areas where prices are decreasing, such as airfare and hotel rooms. The overall trend is clear: tariffs are causing prices to rise, and consumers are starting to feel the impact.