President-elect Donald Trump has made very clear, both on the campaign trail as well as his social media platform Truth Social, that he plans to institute strict 25% tariffs (taxes upon imported foreign goods) on all products coming from bordering countries Mexico and Canada. He has even called this a punishment for the “Crime and Drugs” he asserts are coming across the border from both countries.
Trump has also promised even higher tariffs against China, ranging from 60% to 100%.
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An unfortunate consequence of high tariffs against trade partners, however, is that it forces American retailers to raise their prices as a response — the tariffs drive foreign importers to raise their prices, costing the American retailers more to purchase them. Those American retailers then pass the cost on to shoppers. As a result, Walmart’s CFO John David Rainey recently stated that if the tariffs are implemented, Walmart will have to respond.
“We never want to raise prices,” he stated. “Our model is everyday low prices. But there probably will be cases where prices will go up for consumers.”
How Tariffs Could Impact Retailers Similar to Walmart
Target, for instance, could be hit far harder by tariff price hikes than Walmart. As Michigan State University professor Jason Miller recently told Business Insider, “Target is actually much more exposed than Walmart because Walmart is grocery-heavy and groceries are primarily domestic.” Additionally, Target “relies much more heavily on merchandise that is often imported, such as apparel, housewares and beauty.” If Trump’s tariffs take effect as he’s promised, expect Target to be hit hard.
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According to 24/7 Wall Street, representatives from Costco have admitted “tariffs will hurt its business.” Costco imports a great deal of product; as such, tariffs could massively impact the warehouse retailer. “Costco says it all depends on the types of goods it is importing, the rates imposed, and when the tariffs go into effect.”
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This article originally appeared on GOBankingRates.com: Walmart Will Raise Prices in Response to Trump’s Tariffs — Could Target and Costco Follow?
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