Walmart contends with tariffs

Summary

Marketplace Morning Report: Walmart Contends with Tariffs Release Date: May 15, 2025

Hosted by David Brancaccio, the Marketplace Morning Report delves into the pressing economic and business news shaping today's markets. In this episode titled "Walmart Contends with Tariffs," listeners are provided with in-depth analysis on tariff impacts, federal funding concerns for public media, legislative changes affecting Medicaid, and developments in U.S.-China trade relations.

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Federal Funding Threatens Public Media

[00:30] David Brancaccio opens the report by addressing the precarious state of federal funding for public media. He emphasizes the critical need for individual donations to sustain programs like Marketplace.

"Without federal funds, local public radio stations across the country will struggle to acquire and broadcast Marketplace. That has a big impact on our bottom line as well." — David Brancaccio

Brancaccio urges listeners to contribute to their local stations and directly to Marketplace via marketplace.org/donate, highlighting the essential role of public media in disseminating vital economic news.

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Walmart's Battle with Tariffs

Economic Implications of Tariffs

[01:26] The segment transitions to the impact of tariffs on large retailers, featuring insights from Diane Swonk, Chief Economist at KPMG.

"This is creating an environment that's not unlike the disruptions we saw to supply chains during the height of the pandemic and then the inflation that ensued thereafter." — Diane Swonk
[02:36]

Swonk discusses Federal Reserve concerns regarding supply chain disruptions caused by fluctuating tariff policies, drawing parallels to past economic challenges and warning of potential stagflation.

Walmart's Strategic Response

[03:26] Novo Safo reports on Walmart's recent financial disclosures amidst ongoing tariff uncertainties.

"There are certain items, certain categories of merchandise that we're dependent upon to import from other countries, and prices of those things are likely going to go up and that's not good for consumers." — John David Rainey, CFO of Walmart
[04:15]

Walmart anticipates raising prices by the end of the month due to the elevated import taxes imposed by the Trump administration. This move aligns with similar indications from other major retailers like Amazon and Target, signaling widespread challenges in the retail sector.

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Legislative Changes: Medicaid Cuts

[05:11] David Brancaccio discusses the shaping of a controversial tax bill in the House of Representatives with Nancy Marshall Genser.

"Medicaid patients would pay more for doctors visits. Also, there would be stricter work requirements." — Nancy Marshall Genser
[05:44]

Genser outlines the proposed Medicaid reforms aimed at deficit reduction, including increased out-of-pocket costs for patients and mandatory work hours for adults without dependents. She references the Congressional Budget Office's estimates, which project a deficit reduction of at least $715 billion by 2034 but also an increase of over 8 million uninsured individuals.

"This is definitely not a done deal... some Senate moderate Republicans think this goes too far and they want to scale back the cuts to Medicaid." — Nancy Marshall Genser
[06:21]

The discussion highlights the legislative uncertainties and the potential social implications of the proposed Medicaid changes.

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U.S.-China Trade Relations Evolve

[07:33] The report covers China's temporary lifting of bans on American companies, providing a window for increased exports.

"Our factory stopped production. We put workers on leave because our main market is the United States." — Factory Owner in Guangdong Province
[07:58]

Laura Bicker from the BBC reports from a furniture factory in Guangdong, illustrating the immediate effects of the policy change as factories resume operations to fulfill previously halted orders.

"We will now ship out all our stranded orders and then we hope US Clients will place a large number of new orders in case Trump increases tariffs again after 90 days." — Factory Owner
[08:15]

The segment underscores the fragile nature of U.S.-China trade relations and the uncertainties businesses face due to potential future tariff adjustments.

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Upcoming Segment: Climate-Conscious Investing

[09:45] The episode concludes with a teaser for Amy Scott's upcoming segment on climate-conscious investing.

"Can we invest our way out of the climate crisis? Five years ago it seemed like Wall Street was on it until a backlash upended everything." — Amy Scott
[09:56]

This segment promises to explore the trajectory of climate-focused investments, examining past trends and future prospects in the face of industry resistance.

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Conclusion

In this episode of the Marketplace Morning Report, David Brancaccio effectively navigates complex economic issues, from the immediate impacts of tariffs on retail giants like Walmart to broader legislative reforms and international trade dynamics. Through expert interviews and on-the-ground reporting, listeners gain a comprehensive understanding of the factors influencing today's economic landscape.

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Note: For more detailed insights and updates, subscribe to the Marketplace Morning Report and stay informed on the latest business and economic news.

Transcript

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[David Brancaccio]

Truth is, federal funding for public media is at risk of being eliminated. Without federal funds, local public radio stations across the country will struggle to acquire and broadcast Marketplace. That has a big impact on our bottom line as well. So we're turning to you at this critical time. Individual donations are so important right now. Give to your local station and if you can, please donate directly to Marketplace as well. Go to marketplace.org donate and thank you. Walmart CONTENDS WITH tariffs. I'm David Brancaccio in Los Angeles. First, the head of America's central banking system warned today of possibly higher long term interest rates ahead and suggested that supply chains could get snarled by tariffs, which suggests maybe shortages on Thursdays. We consult Diane Swonk, chief economist at the audit, tax and advisory firm kpmg. Hey there.

[Diane Swonk]

Good morning.

[David Brancaccio]

When you get the person who's arguably the most powerful economic policymaker in the land, Jerome Powell at the Fed, talking about supply shocks, that brings back bad memories of COVID It certainly would get your attention.

[Diane Swonk]

Absolutely. This is one of the things the Federal Reserve is looking at is that they're concerned that the kind of paralysis and panic we've seen from the on again off again tariffs and the lifting of tariffs and then lowering them for a pause for 90 days, that that is creating an environment that's not unlike the disruptions we saw to supply chains during the height of the pandemic and then the inflation that ensued thereafter. And that is something the Federal Reserve is very worried about. They're worried about, about of stagflation. But they're worried about the fact that we're setting up in the pipeline these sort of stops and starts that add frictions to the economy. And friction is heat in the form of inflation. And what is worrisome is that they don't see it going away anyt that they see us in a period of extended supply shocks which is not unlike what we saw also in the 1970s.

[David Brancaccio]

The 1970s. All right. But fresh economic data this morning is a bit of a chill pill. Wholesale inflation not up, but down, Retail sales not down. Ticking along, exactly.

[Diane Swonk]

So we've got the calm before the storm. What we've seen is consumers have moved by ahead of some of the price hikes that are out there. But we know they're coming. We know that the poor in California have been way down in terms of shipments in from China. And even as we try to restart trade from China, there will be some empty store shelves by the end of May. And we're seeing warnings across the board of price hikes that are coming in the pipeline. So this may be the last really good inflation news we see in quite a while.

[David Brancaccio]

All right. That's April data. Diane Swonk at kpmg, chief economist, thank you.

[Diane Swonk]

Thank you.

[David Brancaccio]

Walmart officials are saying the retail giant will raise prices within weeks due to higher import taxes imposed by the Trump administration. The largest retailer in the country released its first quarter results this morning. And while that revenue is up for January to March, the company declined to give profit guidance for the current quarter because of the tariff uncertainty. Marketplace's Novo Safo has more.

[Novo Safo]

Walmart is the nation's largest retailer and a major importer of containerized goods. And while the Trump administration has pulled back its sharpest tariff increases, at least for now, Walmart says import taxes are still higher than what it can absorb. The company is signaling price increases ahead. Chief Financial Officer John David Rainey spoke on an analyst call this morning after Walmart released its quarterly results.

[John David Rainey]

There are certain items, certain categories of merchandise that we're dependent upon to import from other countries, and prices of those things are likely going to go up and that's not good for consumers.

[Novo Safo]

As for timing, Rainey told CNBC that price hikes could start as soon as the end of this month. Other major retailers have also signaled tariff challenges. Amazon said consumer demand is still holding up, but some people might be stocking up in anticipation of higher prices. And Target, which reports results next week, has said tariffs are likely to impact its bottom line. I'm Nova Safo for Marketplace.

[David Brancaccio]

The controversial and very large tax bill is getting shaped, molded and carved on its stops through committees in the House of Represent Representatives this week. Speaker Mike Johnson is aiming for a full House vote next week. A key section, Medicaid, which covers health care for low income people. Marketplace's Nancy Marshall Genser joins us now with more details. Nancy?

[Nancy Marshall Genser]

Well, David, the bill proposes some changes to Medicaid that are meant to save money. Medicaid patients would pay more for doctors visits. Also, there would be stricter work requirements. Adults without children between the ages of 19 and 64 would have to prove they've worked at least 80 hours a month. Opponents of the this idea say that additional paperwork would cause people to lose their Medicaid coverage. The GOP proposal would also cut federal Medicaid funding for states that use their own money to enroll undocumented immigrants in Medicaid.

[David Brancaccio]

Let me cut right to it. How much money saved and at what price?

[Nancy Marshall Genser]

Well, the Congressional Budget Office estimates that the health provisions in the tax bill, including the changes to Medicaid, would cut the deficit by at least $715 billion from 20 to 2034. But CBO also says the legislation would increase the number of people without health insurance by more than 8 million in 2034.

[David Brancaccio]

But it's still in play. How likely, Nancy, are these Medicaid cuts to make it into law and stay in the law?

[Nancy Marshall Genser]

This is definitely not a done deal. First, it has to get through the House. The plan is for the full House to vote on it next week. And some House Republicans want deeper cuts to Medicaid. They say this bill doesn't go far enough. But after it clears the House, this bill still has to go through the Senate. And some Senate moderate Republicans think this goes too far and they want to scale back the cuts to Medicaid.

[David Brancaccio]

China has announced that for 90 days it is lifting bans on dozens of American companies which had been preventing them from doing business with Chinese companies. They were added to China's export control list in early April when Beijing retaliated against President Trump's Liberation Day tariffs. Now, those tariffs weren't a total surprise, right? And Chinese exporters had been ramping back for months. And now with a 90 day thawing of US China relations, they want to get a surge of exporting in. The BBC's Laura Bicker has more from a China furniture factory.

[Laura Bicker]

I'm in southern China in Guangdong Province, and the sound that you hear behind me is a sofa being compressed, boxed up and ready to be shipped to the United States. Production here has restarted. After several months of a pause since Donald Trump's Liberation Day when the boss had to tell his employees to go home.

[Factory Owner]

Our factory stopped production. We put workers on leave because our main market is the United States.

[Laura Bicker]

He KE has now called his workers back to restart his sulfur business. The factory is springing to life.

[Factory Owner]

We will now ship out all our stranded orders and then we hope US Clients will place a large number of new orders in case Trump increases tariffs again after 90 days.

[Laura Bicker]

The surprise deal between Washington and Beijing reached over the weekend, has factories all over China pushing to get their shipments to the U.S. beijing has framed the deal as a win. It believes its defiance brought the Americans to the table. But it's come at a cost for both sides. Derek Wang tells me he'd left space in his factory to make air fryers for US Clients. He spent years developing the product for the American market and had just secured his first buyers.

[Derek Wang]

145% tariffs mean decoupling Bye bye. I have classmates and friends in the U.S. i don't want to say bye bye to my friends.

[Laura Bicker]

Has this shaken your confidence in selling to America?

[Derek Wang]

Hearing the news of these tariffs was like hearing that your parents are getting a divorce. But then you realize that this is a relationship that is never going to end in China.

[Laura Bicker]

I'm the BBC's Laura Bicker for Marketplace.

[David Brancaccio]

And in Los Angeles, I'm David Brancaccio. It's the Marketplace Morning Report from epm American Public Media.

[Amy Scott]

Can we invest our way out of the climate crisis? Five years ago it seemed like Wall street on it until a backlash upended everything.

[Novo Safo]

So there's a lot of alignment between the dark money right and the oil.

[Diane Swonk]

Industry on this effort.

[Amy Scott]

I'm Amy Scott, host of How We Survive, a podcast from Marketplace. In this season we investigate the rise, fall and reincarnation of climate conscious investing. Listen to How We Survive wherever you get your podcasts.