Walmart CFO John David Rainey issued a stark warning: President Donald Trump’s proposed tariffs could force the retail giant to raise prices on some items, despite its commitment to affordability.
Speaking to CNBC, Rainey expressed concern over the unavoidable impact of the potential tariffs.
“We never want to raise prices. Our model is everyday low prices. But there probably will be cases where prices will go up for consumers,” he cautioned.
For many households, these potential price hikes add to an already challenging economic environment, amplifying worries about affordability and inflation.
Rising costs leave Canadians feeling the pinch
In recent years, Canadian consumers faced escalating costs for essential goods.
As of December 2024, Canada’s annual inflation rate stood at 1.8% — a slight drop from 2.0% in October due to the temporary sales tax break announced by the federal government.
Now, after a year of high inflation and rising costs, the threat of a 25% tariff on Canadian goods exported to the US — a threat President Donald Trump hasn’t completely removed from the negotiation table despite the looming February 1, 2025 deadline — means Canadian consumers could be facing another year of rising living costs.
Why tariffs are driving price concerns at retailers, like Walmart
Walmart, the world’s largest retailer, sources two-thirds of its merchandise from North American manufacturers and suppliers, but the remaining one-third comes from countries like China.
It’s these international products that will see price increases — facing a tariff increase as high as 60% to 100%.
Walmart CEO, Rainey, acknowledged that these tariffs could make it impossible for the “Low Price” retailer to maintain the company’s promise of low prices on every product.
Rainey explained that, while raising prices isn’t something the company wants to do, “there probably will be cases where prices will go up for consumers.”
Other retailers, such as Lowe’s and AutoZone, are similarly bracing for higher costs due to their reliance on imported goods. Lowe’s CEO Marvin Ellison revealed that 40% of the company’s merchandise is sourced from outside the US, leaving a significant portion of its inventory vulnerable to the effects of tariffs.
These rising costs aren’t just an inconvenience — they represent a potential economic domino effect. US-based National Retail Federation (NRF) warned that tariffs act as a hidden tax on consumers, driving inflation, eroding household purchasing power and impacting everyday goods like clothing, shoes and home essentials.
How tariffs translate to higher prices
The financial impact of tariffs can be staggering. Proposed tariff rates range from 10% to 20% for general imports, with Chinese goods facing levies of up to 100%.
The NRF estimates that these tariffs could increase household costs by an average of USD$7,600 per year, a cost burden that could spill over to Canadian consumers shopping at US-based retailers like Walmart.
If Canadian consumers take the full brunt of increased costs, this would translate into an average living expense increase of almost $16,700 per year.
Biggest impact is on everyday items
The increase in prices would be especially noticeable in common household items. For instance, a $100 winter coat would now cost $121, while $90 sneakers could cost as much as $116.
These seemingly small increases add up over time and strain household budgets.
Ripple effects for Canadian shoppers
While Trump’s tariffs are primarily aimed at Chinese imports into the US, their impact will likely extend to Canadian consumers. Walmart Canada sources some products from the US, so price hikes south of the border could make their way into Canadian stores. Additionally, as retailers navigate higher costs for imported goods, they may pass these increases on to customers.
This is especially concerning in a time when many Canadians are already feeling the pinch of rising inflation. According to Statistics Canada, inflation for groceries alone increased by 6.7% year-over-year in 2024. With tariffs adding another layer of financial strain, finding ways to mitigate these costs becomes more critical than ever.
Tips to avoid paying more
Although rising prices may feel inevitable, there are steps that Canadian consumers can take to protect their wallets. Here are some practical strategies to minimize the impact of tariff-induced price increases:
Diversify your shopping options Focus on buying locally produced goods to avoid products impacted by tariffs. Supporting local businesses not only helps reduce reliance on imports, but it also bolsters the domestic economy.
Buy in bulk or during sales Stocking up on non-perishable essentials before price hikes go into effect is a smart way to save money. Look out for sales, especially on items that might see the sharpest increases, such as apparel or household goods.
Leverage loyalty Programs Retailers like Walmart offer memberships, such as Walmart+, that provide exclusive discounts and free delivery. These savings can help offset the rising costs of goods.
Focus on private-label Products Private-label goods, such as Walmart’s Great Value brand, are often more affordable than name-brand items. Retailers tend to use private labels to maintain competitive pricing, even when costs rise elsewhere.
Consider online shopping alternatives Compare prices across multiple online platforms to find the best deals. Many e-commerce retailers offer discounts or free shipping promotions that can help reduce overall spending.
The bigger picture
The effects of Trump’s tariffs go beyond Walmart shelves. They highlight a growing trend in global trade policies that prioritize domestic production at the expense of international trade relationships. While these policies may aim to strengthen the US economy, they risk creating economic challenges for consumers worldwide, including in Canada.
NRF CEO, Matthew Shay, described the tariffs as “a tax on American families,” and the same could hold true for Canadian households indirectly affected by these measures. Higher prices, inflation and reduced purchasing power are just some of the potential consequences.
Looking ahead
Walmart and other retailers are already working to adapt. Diversifying supply chains to reduce dependency on high-tariff countries like China is one strategy, though it will take time to implement fully. For now, consumers must remain vigilant, alter their shopping habits and make informed purchasing decisions to navigate this uncertain landscape.
As Rainey pointed out, price increases may be unavoidable in some cases, but taking proactive steps can help soften the blow. By focusing on local goods, shopping strategically and leveraging retailer programs, Canadians can weather the storm of rising prices and keep their budgets intact.
This article When Walmart’s ‘low prices’ aren’t so low: How Trump’s tariffs could cost Canadians more — and how to fight back originally appeared on Money.ca
Sources
1. CNBC: Walmart may have to raise some prices if Trump tariffs take effect, CFO says, by Melissa Repko (Nov 19, 2024)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.