Tariffs on virtually all imports are raising the cost of goods for retailers, with costs increasing each week and expected to continue into later quarters. Major retailers have mitigated many tariff costs so far but have raised prices on some items while keeping others low. Some back-to-school products were cheaper year-over-year. Higher-income shoppers are increasingly attracted by deals while middle- and lower-income customers sometimes switch or skip pricier purchases. Tariff effects on shopping behavior have been gradual and muted. Overall consumer spending remains steady, with Walmart U.S. sales up 4.6% and Home Depot U.S. sales up 1.4% in the latest quarter.
Walmart says it's been able to mitigate many of the tariff costs so far, but they are rising "each week" and will continue to do so through the rest of the year. The world's largest retailer like many others, including Home Depot and Target has had to raise prices on some items, while keeping prices down on others. Walmart says its top back-to-school products were even cheaper this year than last year.
Still, the Trump administration's tariffs on virtually all imports loom large for all retailers who are seeing the cost of goods rise. Previously, when President Trump was threatening tariffs up to 145% on Chinese imports, Walmart drew his ire by saying that would lead to higher prices. On Thursday, Walmart CEO Doug McMillon said his company's costs keep climbing: "We've continued to see our costs increase each week, which we expect will continue into the third and fourth quarters," he said on an earnings call.
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