Trump Urges Walmart to Absorb Tariff Costs and Pressures Fed for Rate Cuts

In a bold move that has sparked heated discussions across the United States, President Donald Trump has called out retail giant Walmart, urging the company to “eat the tariffs” instead of passing the costs onto consumers. At the same time, he has renewed his push for the Federal Reserve to cut interest rates, claiming it would help ease economic pressures. These developments, unfolding in May 2025, have raised questions about the impact of tariffs on everyday Americans and the broader economy. Here’s a closer look at what’s happening, why it matters, and what it could mean for consumers and businesses alike.

Trump’s Tariff Stance and Walmart’s Dilemma

On May 18, 2025, President Trump took to his social media platform, Truth Social, to criticize Walmart for attributing potential price hikes to his administration’s tariffs on imported goods. “Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain,” Trump wrote, adding that the retailer and its suppliers, particularly from China, should “EAT THE TARIFFS, and not charge valued customers ANYTHING.” He emphasized that he and Walmart’s customers would be “watching” to ensure prices remain low.

Walmart, the largest retailer in the U.S., responded cautiously. CEO Doug McMillon acknowledged the challenge, stating on May 15 during an earnings call, “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.” The company reiterated its commitment to keeping prices low for as long as possible but warned that price increases on items like bananas and children’s car seats could start as early as June.

Trump’s tariffs, which include a 10% baseline import tax and higher rates on specific countries like China (previously reaching 145%), have disrupted global trade since early April. While Trump insists that foreign producers bear the cost of these tariffs, most economists disagree. They argue that American businesses, like Walmart, pay the tariffs when importing goods and often pass those costs to consumers to maintain profit margins. This clash has put Walmart in a tough spot: absorb the costs and risk lower profits or raise prices and face public and presidential backlash.

Treasury Secretary Scott Bessent, a key figure in Trump’s tariff negotiations, attempted to bridge the gap. On May 17, after speaking with McMillon, Bessent told CNN that Walmart would absorb some of the tariff costs, but “some may get passed on to consumers.” He downplayed the severity of potential price hikes, suggesting Walmart’s warnings were partly due to federal regulations requiring companies to present worst-case scenarios to avoid legal issues.

The Bigger Picture: Tariffs and Consumer Prices

The tariff debate isn’t just about Walmart—it’s a signal of broader challenges facing the retail industry. Companies like Mattel have also warned investors about price increases due to tariffs, prompting similar rebukes from Trump. The president’s stance reflects a balancing act: he wants to protect American industries through tariffs while assuring the public that prices won’t skyrocket. However, economic analyses, including those from Moody’s and the Committee for a Responsible Federal Budget, suggest that tariffs could worsen inflation and add trillions to the national deficit over the next decade.

For consumers, this could mean higher prices on everyday goods. Walmart’s business model relies on “everyday low prices,” but CFO John David Rainey told CNBC, “The magnitude of these increases is more than any retailer can absorb.” If Walmart, with its massive scale and supply chain dominance, struggles to absorb these costs, smaller retailers may face even greater challenges. This could lead to a ripple effect across the economy, with price hikes hitting everything from groceries to electronics.

Public sentiment, as seen in posts on X, reflects a mix of frustration and skepticism. Some users support Trump’s push to keep prices low, while others argue that tariffs inevitably raise costs for consumers. One X post noted, “Walmart will ‘eat’ some tariff costs, pass some to consumers,” highlighting the tension between Trump’s demands and economic realities.

Trump’s Push for Fed Rate Cuts

Alongside his tariff rhetoric, Trump has intensified pressure on the Federal Reserve to cut interest rates. On May 17, he reiterated calls for Fed Chair Jerome Powell to lower the benchmark rates, arguing that inflation is under control and rate cuts would boost economic growth. Trump’s optimism contrasts with Powell’s cautious approach. The Fed has kept rates steady, citing uncertainty caused by tariffs and their potential to both slow growth and increase prices.

Powell has warned that tariffs could fuel inflation, a concern echoed by economists who point to the risk of higher costs for imported goods. Lowering interest rates could stimulate spending but might also exacerbate inflation if prices rise due to tariffs. Trump, however, maintains that inflationary pressures have “largely disappeared,” a claim that contradicts most independent analyses.

The Fed’s independence is a cornerstone of U.S. economic policy, and Trump’s public pressure has sparked debate about political influence over monetary decisions. If the Fed were to cut rates, it could lower borrowing costs for businesses and consumers, potentially offsetting some tariff-related price hikes. But it’s a delicate balance—too much stimulus could overheat the economy, while inaction might dampen growth.

What This Means for Americans

For everyday Americans, the combination of tariffs and the push for rate cuts creates a complex economic picture. If retailers like Walmart pass on tariff costs, consumers could see higher prices for essentials, squeezing household budgets already strained by inflation in recent years. Walmart’s warning about price hikes in June has raised concerns, especially for low-income shoppers who rely on the retailer’s affordability.

On the other hand, if the Fed cuts rates, it could make loans cheaper for things like homes, cars, or business expansions. This might provide some relief, but only if inflation remains in check. The uncertainty surrounding tariffs and monetary policy has left businesses and consumers in a wait-and-see mode, with many bracing for potential cost increases.

The Political and Economic Stakes

Trump’s actions are not just economic—they’re deeply political. His tariff policies and public criticism of companies like Walmart are part of a broader agenda to project strength and protect American jobs. However, his first 100 days in office have faced growing opposition, with a Washington Post-ABC News-Ipsos poll showing declining approval ratings. The tariff debate, coupled with other moves like downsizing federal agencies, has fueled both support and criticism.

For Walmart, the stakes are high. The company’s decision to speak out about tariffs, even cautiously, broke from an initial silence among businesses hoping for tax cuts. This public spat with Trump could set the tone for how other retailers navigate the trade war. If Walmart absorbs some costs, it might maintain customer loyalty but at the expense of profits. If it raises prices, it risks alienating shoppers and drawing further ire from the administration.

Looking Ahead

As the tariff saga unfolds, all eyes are on Walmart and the Federal Reserve. Will Walmart find a way to balance its margins and keep prices low? Will the Fed bow to Trump’s pressure and cut rates, or will it hold firm to avoid inflation? These questions will shape the economic landscape in the coming months.

For now, consumers should prepare for potential price increases, especially on imported goods. Businesses, meanwhile, face tough choices between absorbing costs, raising prices, or rethinking supply chains. Trump’s tariff policies and his push for rate cuts are bold moves, but their success depends on navigating the delicate balance between economic growth and affordability.

In the words of one economist, “If Walmart can’t avoid passing on costs, what business can?” As the world’s largest retailer grapples with these pressures, the outcome will ripple through the U.S. economy, affecting millions of shoppers and businesses alike. Stay tuned as this story develops, and keep an eye on how these policies play out in stores and at the checkout counter.

Also Know :- Brands Embrace User-Generated Content in 2025 to Build Trust and Engagement