Walmart, Tariffs, and Canadian Aluminum

Trump posted that Walmart should “EAT THE TARIFFS” on Truth Social at around 7:30am PDT on Saturday, May 17, 2025.

This was in response to Walmart CEO Doug McMillon's prepared remarks on inflation during the company's first quarter earnings call on Thursday, May 15, 2025.

I want to thank President Trump and Secretary Bessent for the progress made recently. We are hopeful that it leads to a longer-term agreement between the U.S. and China that would result in even lower tariffs. 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 are not able to absorb all the pressure given the reality of narrow retail margins.

Later in the call, Walmart's CEO noted how Walmart's suppliers are finding creative ways to mitigate price pressures from tariffs.

We also have suppliers shifting materials from tariff-impacted components like aluminum to fiber glass where there is no tariff. Our merchants, sourcing team and suppliers are being creative.

Why Canada gets hit

The 25% tariffs on U.S. imports of aluminum were announced back on Mar 12, 2025. On Mar 26, 2025, Reuters reported that hundreds of Canadian steel and aluminum workers had already been laid off.[1] Moreover, CBC shared a report on Apr 30 predicting that over the next few years:

Primary metal industries would be hardest hit by job losses, with 17,700 fewer jobs expected.[2]

Walmart's Strategy

Walmart's merchants, sourcing team, and suppliers are focussed on mitigating the impact of tariffs. And Walmart's FY2025 annual report notes that Walmart's net profit margin was 2.96% (net income of $20.16B divided by revenue of $680.99B), for the full year ending Jan 31, 2025 (up from 2.51% in FY2024). This highlights the company's low-margin, high-volume business model. With the effective U.S. tariff rate on all imports at 17.8%, Walmart cannot absorb the full impact of the tariffs without passing on any of their input cost increases to customers.

Trump's Fantasy vs. Reality

No matter how Walmart responds to the U.S. tariffs, the U.S. economy is worse off. According to their Earnings Call on Thursday, May 15, Walmart will raise its prices even with the reduced 10% reciprocal tariff on China. But even in the fantasy world where Walmart “EATS THE TARIFFS”, that just makes it nearly impossible for small and mid-sized American retailers and grocery stores to compete. As a result, small U.S. retailers are forced to lay off workers or go out of business.

Trump's “Truth” Social post telling Walmart to “EAT THE TARIFFS” is just another example of how he doesn't understand basic economics.

Bottom line

• U.S. consumers pay higher prices
• Canadian aluminum workers face job losses
• Walmart survives
• And if we do nothing, Trump wins

So let's keep our ELBOWS UP.