Trump warns..

 

Trump warns America’s businesses: Eat my tariffs, or pay the price

President Donald Trump is sending a stern warning to Corporate America: He will use his bully pulpit to publicly shame companies that dare to raise prices because of tariffs.

After Walmart last week said it would have to jack up some prices because of high costs of the global trade war, Trump on Saturday responded forcefully in a Truth Social post, demanding Walmart reverse its decision.

“Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain,” Trump said. “Between Walmart and China they should, as is said, “EAT THE TARIFFS,” and not charge valued customers ANYTHING. I’ll be watching, and so will your customers!!!”

The rebuke was the White House’s third such public reprimand of a big American business that discussed the possibility of raising prices because of the steep cost of tariffs.

On April 29, after Amazon reportedly considered displaying an additional tariff charge next to the listed price on its Haul platform, White House Press Secretary Karoline Leavitt at a press briefing held up a photo of Amazon Chairman Jeff Bezos and called the move a “hostile and political act.” Trump, whom a senior official described as “pissed,” called Bezos to complain, saying the company’s founder “solved the problem very quickly.”

Amazon said that although it was considering displaying the tariff cost, the plan was ultimately not approved and “not going to happen.”

A week later, on May 6, Trump threatened a 100% tariff on Mattel after the Barbie and Hot Wheels maker said it would have to raise prices. Mattel CEO Ynon Kreiz said Trump’s tariffs won’t bring toy manufacturing to America, because toys couldn’t be manufactured in America and still be sold at affordable prices.

“We don’t see that happening,” Kreiz told CNBC after Mattel warned that tariffs will increase toy prices for American consumers.

Trump fired back from the Oval Office, threatening the company and its CEO.

“We’ll put a 100% tariff on his toys, and he won’t sell one toy in the United States, and that’s their biggest market,” Trump said. “I wouldn’t wanna have him as an executive too long.”

Trump’s demands thus far appear aimed at big companies and their significant profits — echoing former President Joe Biden’s populist “greedflation” mantra, which accused companies that raised prices of taking advantage of the inflation crisis throughout much of his term.

“Walmart made “BILLIONS OF DOLLARS last year, far more than expected,” Trump posted on social media on Saturday. That’s accurate — Walmart is America’s biggest retailer and had a strong 2024 on the back of inflation-weary customers seeking out its notoriously low prices.

But Walmart’s profit is a function of its massive scale, rather than artificially high prices. As a percentage of sales, Walmart’s operating income last quarter was just a little over 4%. Its net profit margin was less than 3% — razor-thin by business standards.

No one believes Walmart, the world’s largest company measured by revenue, is going to the poor house anytime soon, and Trump is probably right that the company could “eat” much or all of the tariff cost and make out just fine in the long run. But CEO Doug McMillion doesn’t work for Trump — he works for Walmart’s shareholders, who demand earnings stability and growth.

That’s why McMillion last week said Walmart would eat some — but not all — of the tariff cost. To keep its minuscule margins steady, the company would have to pass some of that on to customers.

“We will do our best to keep our prices as low as possible. But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins,” McMillon said Thursday in an earnings call. “We’re positioned to manage the cost pressure from tariffs as well or better than anyone. But even at the reduced levels, the higher tariffs will result in higher prices.”

Despite Trump’s angry call to Bezos, his tariff threat against Mattel and his warning to Walmart, other American brands will almost certainly follow suit. If Walmart — whose entire business has been built on achieving massive scale and supply chain dominance — can’t avoid passing along costs to customers, what business can? Investors will be watching Home Depot and Target very closely this week for more signs of trade war pain and, perhaps, higher prices.

Higher prices are coming to America, and no amount of bullying, even from the president, can stop it.

Original link-https://shorturl.at/Nv90k