In the latest sign that the trade is starting to affect the greater
economy, Walmart has announced that President Trump’s tariffs on Chinese goods
will lead to increased prices at the giant retail chain.
“We’re going to continue to do everything we can to keep
prices low. That’s who we are. However, increased tariffs will lead to
increased prices, we believe, for our customers,” CNN reported that Walmart Chief Financial Officer Brett Biggs told reporters on a
conference call discussing earnings for the first quarter of 2019.
Biggs did not say which products would be subject to the
price increases, but President Trump’s most recent round of tariffs, which
applied a 25
percent import tax to $200 billion of Chinese goods, affects a wide range
of products that are purchased by a large number of Americans. Per CNN, Walmart
imports about 26 percent of its merchandise from China and with a Walmart store
within 10 miles of 90 percent of Americans, the vast majority of the
country will be paying more for consumer goods.
Walmart’s announcement undercuts the president’s claim that
China is paying the tariff taxes. Instead, Chinese manufacturers have largely
kept their old pricing structure and American importers have paid the tax. Importers
pass the tax along to retailers like Walmart, who are now passing it along to
The Walmart price increases will hit a core segment of the
Trump coalition. Walmart is known for its blue-collar clientele and the fact
that its stores are often the only option for many items in rural areas. It is
these blue-collar, rural voters who have formed the most stable part of Trump’s
base as support
for Republicans among most other demographics has declined since 2014.
Depending on the length of the trade war and whether more
tariffs are applied in coming months, Trump may find that his rural base
fracturing. Already farmers, who are among the hardest hit from the trade war,
are showing their discontent with the policies that have closed off Chinese
markets for American agricultural products.
“We’re in a free fall out here in agriculture. We’ve seen a
30 percent decrease in prices of soybeans, and this isn’t all about soybeans,”
Christopher Gibbs, an Ohio farmer said on CNN.
“With the geopolitical turmoil that the president has thrown into the mix over
the last year, the markets just don’t have anywhere to go.”
Now, with Walmart and other retailers raising prices to pass
along Trump’s tariff tax to their customers, farmers and other exporters are
being squeezed from both sides. They are earning less as foreign markets find
cheaper, untaxed alternatives to American goods and they are paying more due to
As we’ve reported previously, Morning Consult tracks presidential
approval across the 50 states. Polling this year shows Trump underwater across
the Rust Belt and with a net approval of fewer than five points in many typically
Republican farm states such as Georgia, Indiana, Nebraska, and Texas. Unless
the president gets a deal to resolve the trade war with China soon, we may find
out how low he can go.