Retail Giant Sees Declining Consumer Sentiment Amid Trade Uncertainty
Walmart (WMT) is already feeling the effects of President Trump’s latest tariff policies, with consumer sentiment taking a significant hit over the past four weeks, according to new research from Citi retail analyst Paul Lejuez.
A survey of 250,000 Walmart customers revealed growing concerns about purchasing power, as rising tariff-related costs contribute to fears of inflation and an economic slowdown.
Consumer Sentiment Declines Across All Segments
Speaking at Citi’s consumer conference in Florida, Lejuez highlighted that Walmart is seeing broad declines in sentiment across income levels, regions, and political affiliations.
While some competitors have already raised food prices due to tariff concerns, Walmart has opted not to follow suit—leading to wider price gaps between Walmart and its rivals. According to Lejuez, a handful of competitors have increased avocado prices by 15%, as the fruit is primarily sourced from Mexico.
Tariff Policies Impact Walmart and Retail Industry
The ongoing trade war has introduced uncertainty across global markets. While President Trump has temporarily paused 25% tariffs on Canadian and Mexican imports that meet United States-Mexico-Canada Agreement (USMCA) standards, his administration has moved forward with:
- 25% tariffs on steel and aluminum imports from Canada, Australia, and the EU.
- 10% tariffs on Chinese imports, following an initial 10% increase in February—affecting major retailers like Walmart and Target (TGT).
Global Response: Countries Retaliate with Tariffs on U.S. Goods
Nations targeted by Trump’s tariff policies have quickly responded with countermeasures:
- China: Implemented 15% tariffs on U.S. chicken, wheat, corn, and cotton, plus 10% tariffs on key agricultural goods, including soybeans, pork, seafood, and dairy.
- Canada: Announced a 25% tariff on $30 billion CAD worth of U.S. imports, with additional tariffs set to begin in three weeks.
- European Union: Imposing tariffs on $28.33 billion worth of U.S. goods, impacting industries from apparel to liquor starting in April.
Walmart’s Earnings and Stock Performance Take a Hit
As trade tensions escalate, Walmart issued a profit warning in late February, further unsettling investors. The company forecasted full-year earnings per share of $2.50 to $2.60, well below analysts’ expectations of $2.76 per share.
John David Rainey, Walmart’s Chief Financial Officer (CFO), acknowledged the challenges but emphasized the company’s cost-mitigation strategies:
“We’re not immune to tariffs, but we work with suppliers, shift supply chains where necessary, and rely on private brands to keep prices low,” Rainey told Yahoo Finance.
Since the earnings report, Walmart stock has declined 15%, contributing to a broader downturn in the retail sector. Target (TGT) also reported weaker-than-expected February sales and issued a profit warning for the first quarter.
Retail Industry Braces for Continued Tariff Challenges
Retailers like Walmart are navigating an increasingly complex landscape as trade wars, inflation fears, and shifting consumer sentiment continue to impact the market. While Walmart has taken steps to stabilize pricing, the effects of Trump’s tariffs may lead to further price increases, supply chain adjustments, and financial pressures in the coming months.
Key Takeaways for Walmart and Retail Investors:
✅ Consumer sentiment is declining across all income levels.
✅ Some competitors have already raised food prices, creating wider price gaps.
✅ Walmart’s earnings report fell short of expectations, causing a 15% stock decline.
✅ The global trade war is escalating, with China, Canada, and the EU imposing counter-tariffs.
✅ Walmart is leveraging private brands and supply chain adjustments to combat rising costs.
