Retail giant Walmart is grappling with stock price pressures following a social media storm ignited by former U.S. President Donald Trump. Over the weekend, Trump publicly criticized the company, demanding it "swallow the tariffs" with China rather than pass costs to consumers. This directly contributed to a 2% premarket decline in Walmart's stock (WMT-US) on Monday, highlighting how political factors can significantly impact corporate operations amid ongoing U.S.-China trade tensions.

Trump's Accusations and Walmart's Defense

In scathing social media posts, Trump accused Walmart of using tariffs as an excuse to raise prices, emphasizing that the company's record $13.7 billion profit in 2023 demonstrated its capacity to absorb tariff costs. "I'll be watching, and so will your customers!" he warned.

Walmart has actively sought to mitigate tariff impacts. CEO Doug McMillon previously met with Trump to discuss the issue, advocating for complete elimination of Chinese tariffs. Internal sources reveal Walmart argued that even the current 30% tariff rate (down from 145% during peak trade tensions) substantially affects mass-market goods like furniture and toys.

CFO John David Rainey acknowledged the challenge during Q1 earnings: "Low prices are our stance, and we'll fight to maintain them long-term." However, he conceded that certain imported goods face "unsustainable cost increases," predicting noticeable price hikes by late May, particularly for items like strollers, furniture, and toys where tariffs could drive double-digit percentage increases .

Earnings Concerns Compound Tariff Woes

Trump's criticism coincided with Walmart's mixed Q1 results. While adjusted EPS of $0.61 beat expectations, $165.6 billion revenue fell short of Wall Street's $166.02 billion forecast. Comparable U.S. store traffic growth slowed year-over-year, and the company's full-year EPS guidance ($2.50-$2.61) mostly trailed analysts' $2.61 projection.

Most critically, Walmart warned that reverting to 145% tariffs would severely jeopardize profit growth, underscoring how trade policy has become pivotal to retail profitability.

The Broader Retail Dilemma

Walmart's predicament reflects sector-wide challenges as retailers balance maintaining low prices against rising import costs. Potential strategic responses include:

• Supply chain diversification: Sourcing from alternative markets to reduce Chinese dependency

• Private label expansion: Boosting higher-margin store brands less vulnerable to tariffs

• Operational efficiency: Leveraging AI and automation to offset cost pressures

• Policy engagement: Advocating for favorable trade terms through government channels

As political and economic forces converge, Walmart's ability to navigate these complexities will prove critical to maintaining its market leadership. The trajectory of U.S.-China trade relations remains a decisive factor for the entire retail sector's future.