Shares in U.S. retail giant Walmart (WMT) were higher today despite worries that President Trump’s new tariff plan could mean a hike in store prices.
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New Uncertainty
The new rules, to be imposed on November 1, would mean a 100% tariff being placed on Chinese imports. At a time when it appeared that retailers had gotten used to the new normal of higher tariffs including 30% on Chinese imports, this threatens to bring new uncertainty to supply and costs.
Walmart is in the firing line of higher tariffs given that key consumer goods segments such as clothes, toys, home furnishings and consumer electronics are exposed to Chinese sourcing.
Walmart imported approximately 60% of its products from China in 2023. Rival Amazon (AMZN) is reported to depend on China for up to 70% of its goods, based on estimates from Wedbush.
Earlier this year President Trump told Walmart, long known for value in the U.S., to “eat the tariffs” when it warned that prices might have to rise in its stores. It was so uncertain of the impact that it withdrew its second-quarter operating margin guidance.
Walmart Actions
It has taken actions such as trying to beef up its U.S. supply base. Despite faltering consumer confidence in its most recent earnings call, CEO Doug McMillon said that so far the impact of tariffs has been “gradual enough that any behavioral adjustments by the customer have been somewhat muted.”
Indeed, Walmart US recently posted second quarter net sales up 4.8% year over year, reflecting strong growth in the grocery and health-and-wellness categories plus a 26% jump in e-commerce sales. Comparable sales excluding fuel gained 4.6%, aided by upticks in average ticket size and transaction count.
Price rollbacks have helped Walmart maintain its shopper value proposition, with the number of rollbacks in grocery up 30% versus a year earlier.
However, only last month McMillon told investors at the Goldman Sachs Global Retailing Conference in September, that consumers will still feel pressure for the rest of this year and into 2026 as President Trump’s tariffs fuel inflation and stir shopper uncertainty.
The tariff timetable couldn’t have come at a worse time for Walmart and other retailers with the Holiday season fast approaching. They might be hoping that Trump gets into the festive spirit early and changes his mind.
Is WMT a Good Stock to Buy Now?
On TipRanks WMT has a Strong Buy consensus based on 29 Buy ratings. Its highest price target is $129. WMT stock’s consensus price target is $114.89, implying a 12.81% upside.
