Arkansas-based Walmart, the world’s largest retailer that traditionally has catered to working- and middle-class Americans, warned the President-elect’s plans to hike import duties across the board will be felt by everyday consumers.

“Tariffs are going to be inflationary, there’s no disputing that,” Walmart finance chief John David Rainey told Fox News on Thursday.

That’s not the message the Trump campaign took to the nation during the 2024 election race, however. During the campaign, the former president asked whether voters were better off than they were a little less than five years ago, when the seeds of inflation were sown with the outbreak of COVID-19. 

The resounding answer was no, as two-thirds of the population were dissatisfied with the state of the economy. Coast to coast, Americans felt a deep-seated resentment at spiraling prices on everything from gasoline to groceries to restaurant visits. 

Trump labels tariffs a ‘tax on foreign countries’ with no downside

In came the Trump campaign, which repeatedly portrayed tariffs as a panacea. They would fill the nation’s coffers, reduce the deficit, bring back manufacturing jobs—and might even eliminate the need for income taxes. And the costs? Well, those would be borne by others—chiefly U.S. strategic rival China, which could face duties as high as 60% on goods it exported. 

“A tariff is a tax on a foreign country, that’s the way it is whether you like it or not,” Trump promised supporters at an August rally in the key battleground state of Pennsylvania. “It’s a tax on a country that’s ripping us off and stealing our jobs.”

The National Retail Federation, however, begged to disagree. Unless exporters are both willing and able to drop their factory gate prices in order to maintain volumes, the costs will entirely be borne by Americans—either directly in the form of import duties, indirectly through higher prices passed on to the customer, or some mix thereof.

“A tariff is a tax paid by the U.S. importer, not a foreign country or the exporter,” NRF vice president Jonathan Gold said in a statement published one day prior to the November elections. 

Advantages and disadvantages of tariffs

Limited tariffs targeted at strategic economic sectors—those vital to national security, for example—can be sensible, and every country imposes duties in one form or another. Some can be through the back door by requiring certain regulations be met in order to protect domestic sectors such as farming and agriculture. 

And while economic incentives like tax breaks can encourage migratory manufacturers to move their factories back onshore, tariffs can be effective as well. 

Yet they can also cause businesses downstream of these producers to shrink as they must shoulder higher costs. As a result, they can inadvertently lead to a loss in American jobs when all effects are netted out. 

Even for those U.S. goods that might not require any foreign inputs, tariffs can also be inflationary since they are an invitation for domestic suppliers to hike prices simply to pad profits for shareholders. Finally, they can trigger a retaliatory trade war if left unchecked.

Walmart warns, ‘We’re not immune’—and costs will be passed on

That’s why most industrialized countries traditionally have followed economic orthodoxy by seeking to dismantle tariffs, instead specializing in goods and services where they enjoy a competitive advantage. 

The resulting era of highly efficient, globalized supply chains caused prices for many goods to decline, with flat-screen television sets being an often cited example.

This now could come to an abrupt end if Trump imposes a blanket tariff on all imported goods that could range anywhere from 10% to 20%. 

Walmart finance boss Rainey said the massive retailer would do its utmost to cushion the blow—but pain was inevitable.

“We’re going to work with our suppliers as well as our own private brand assortment to continue to try to bring down prices for customers,” he told Fox News. “But we’re not immune, and tariffs will be inflationary for customers.”