U.S. Retail Giants Have Kept Prices Low. But How Long Can It Last?

Summary

WSJ What’s News: U.S. Retail Giants Have Kept Prices Low. But How Long Can It Last?
Release Date: April 29, 2025

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Introduction

In the April 29, 2025 episode of WSJ What’s News, hosted by Pierre Bienname and Alex Osola of The Wall Street Journal, the discussion centers on how U.S. retail giants have managed to keep consumer prices low amidst rising tariffs and what the future holds for this strategy. The episode delves into the tactics employed by major retailers like Amazon, Walmart, and Target, the broader impact on the supply chain, and touches on related developments in the logistics and energy sectors.

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Amazon’s Tactical Response to Tariffs

Amazon finds itself at the forefront of the retail sector's battle to maintain low prices in the face of escalating tariffs. Initially, the company considered displaying the impact of tariffs during the online checkout process on its budget-friendly platform, Hull. However, after pressure from President Trump and the White House, Amazon retracted this plan.

Pierre Bienname reports, “Amazon was forced to play down a report that it was considering displaying the impact of tariffs during its online checkout” (01:05). The company clarified that the idea was never approved and will not be implemented, stating, “Amazon declined to comment on the phone” (02:00).

Retail Giants’ Strategies to Maintain Low Prices

Despite the imposition of tariffs, retail powerhouses like Walmart, Target, and Home Depot have successfully kept consumer prices from skyrocketing. However, industry insiders express skepticism about the sustainability of this strategy. In a recent meeting with President Trump, the CEOs warned, “higher prices would be difficult to avoid” and indicated potential scarcity of certain products if consumers opted out to avoid tariff costs (02:04).

Wall Street Journal reporter Shane Shiflett explains, “Some retailers have paused shipments from China and other countries, relying on existing inventory to avoid raising prices” (02:27). Additionally, these companies have implemented cost-cutting measures, such as reducing office perks, and are pushing suppliers to absorb tariff costs to prevent price hikes (02:58).

The Role of Independent Merchants on Amazon

Amazon hosts a significant number of independent merchants, accounting for approximately 60% of its sales. These merchants operate within Amazon’s pricing framework, where attempts to raise prices by substantial margins (e.g., 30%) result in de-emphasis of their listings on the platform (03:29). This system ensures that price increases by third-party sellers are minimal, helping Amazon maintain its competitive pricing.

UPS’s Operational Shift Away from Amazon

In response to changing market dynamics, United Parcel Service (UPS) announced plans to cut 20,000 operational positions this year to reduce expenses (05:09). This move follows UPS’s decision in January to decrease the number of packages delivered for Amazon, which previously accounted for about 12% of UPS’s revenue (05:14). By incorporating more automation into its facilities, UPS aims to lessen its dependency on labor, signaling a strategic shift away from its relationship with Amazon (05:39).

Amazon’s Ambitious Project Kuiper

Beyond retail, Amazon is making significant strides in the aerospace sector with Project Kuiper. The company launched 27 satellites into space as part of its effort to compete with SpaceX’s Starlink and other low Earth orbit (LEO) satellite networks aiming to provide global internet access (05:56). Wall Street Journal’s Micah Madenberg highlights that Amazon plans to invest over $10 billion into this initiative, seeking to establish a robust LEO satellite network that offers higher speeds and lower latencies (06:18). This venture represents Amazon’s ambition to secure another major franchise to complement its existing businesses like Amazon Web Services.

BP’s Strategic Shift Back to Fossil Fuels

In a notable shift within the energy sector, BP announced plans to increase its U.S. oil and gas production by more than 50% by 2030, simultaneously slashing investments in green energy initiatives (08:08). Matthew Dalton, covering energy for The Wall Street Journal, explains that BP is redirecting its capital expenditure towards traditional fossil fuels due to insufficient market rewards for its diversified energy approach. BP aims to boost U.S. production from 650,000 barrels per day to over one million by 2030, focusing on both onshore operations and the Gulf of Mexico (08:31).

Market Reactions and Trade Tensions

The episode also covers the stock market’s response to recent trade developments. Following U.S. Commerce Secretary Howard Lutnick’s announcement of a trade deal with an unnamed country, the Dow Jones Industrial Average rose by three-quarters of a percent, while the NASDAQ and S&P 500 each gained about half a percent (08:38). However, the S&P 500 still recorded its largest loss in the first 100 days of a new presidential term since 1973 (10:52).

Amidst these developments, China issued a strong statement rejecting U.S. tariff policies, emphasizing its commitment to resisting what it termed as “bullying tactics” aimed at maintaining American hegemony (11:16). The Chinese Foreign Ministry spokesperson declared, “China won't kneel down because we know standing up for ourselves keeps the possibility of cooperation alive while compromise snuffs it out” (11:21). This stance underscores the persistent tension between the two economic superpowers and the challenges in reaching a comprehensive trade settlement.

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Conclusion

The episode of WSJ What’s News provides a comprehensive overview of how U.S. retail giants are navigating the complex landscape of tariffs and global trade tensions to keep consumer prices low. While companies like Amazon and Walmart have implemented various strategies to absorb costs and maintain their pricing structures, the sustainability of these measures remains uncertain. Additionally, developments in logistics, such as UPS’s shift away from Amazon, and strategic moves in the energy sector by BP, highlight the broader economic adjustments taking place. The ongoing trade tensions between the U.S. and China continue to cast a shadow over these efforts, indicating that the battle to keep prices low is far from over.

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Notable Quotes:

• Pierre Bienname: “Amazon was forced to play down a report that it was considering displaying the impact of tariffs during its online checkout” (01:05).

• Shane Shiflett: “Some retailers have paused shipments coming from China and other countries, relying on existing inventory to avoid raising prices” (02:27).

• Matthew Dalton: “They have shifted away from a strategy of investing in a broad suite of different energy technologies, from renewables such as wind and solar, to they've really pivoted sharply towards just oil and gas” (08:42).

• Chinese Foreign Ministry Spokesperson: “China won't kneel down because we know standing up for ourselves keeps the possibility of cooperation alive while compromise snuffs it out” (11:21).

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This summary was produced based on the transcript provided and adheres to the guidelines for creating a comprehensive and engaging overview of the podcast episode.

Transcript

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[Pierre Bienname]

Amazon has ruled out displaying the impact.

[Alex Osola]

Of tariffs after criticism from the White House.

[Pierre Bienname]

Plus, retail giants in the US have.

[Alex Osola]

Managed to keep prices under control, but.

[Pierre Bienname]

They say that won't last.

[Shane Shiflett]

The full impact of those tariffs is yet to be seen, but it is something that will eventually appear in the prices that Americans pay for products on the store shelves of Walmart, Target or online.

[Alex Osola]

And Amazon and the Chinese Foreign ministry.

[Pierre Bienname]

Denounces the U.S. s tariff policy in.

[Alex Osola]

A fiery social media video. It's Tuesday, April 29th.

[Pierre Bienname]

I'm Pierre Bienname for the Wall Street.

[Alex Osola]

Journal, filling in for Alex Osola.

[Pierre Bienname]

This is the PM edition of what'.

[Alex Osola]

The Top Headlines and Business Stories that.

[Pierre Bienname]

Move the World Today. Amazon was forced to play down a report that it was considering displaying the impact of tariffs during its online checkout.

[Alex Osola]

Process after President Trump called the company's founder, Jeff Bezos, and the White House.

[Pierre Bienname]

Press secretary said such a move would be a hostile and political act. The company said today it had considered displaying how much import charges would increase prices on its ultra cheap shopping website, Hull, but it added that the idea was never appro and is not going to happen. Amazon also said it hadn't considered the.

[Alex Osola]

Idea for the main Amazon site and.

[Pierre Bienname]

No changes had been implemented on any Amazon properties. Amazon declined to comment on the phone.

[Alex Osola]

Call between Trump and Bezos.

[Pierre Bienname]

In the face of rising tariffs, retail giants in the U.S. including Amazon, have managed to keep prices from ballooning for now.

[Alex Osola]

But as the chief executives of Walmart.

[Pierre Bienname]

Target and Home Depot told President Trump.

[Alex Osola]

In a meeting last week, the that can't last forever. According to people familiar with the matter.

[Pierre Bienname]

They warned Trump that higher prices would be difficult to avoid and said certain products could become scarce if retailers decide not to sell them in order to avoid tariff costs.

[Alex Osola]

Wall Street Journal reporter Shane Shiflett joins me now with more. Shane, how are these big companies managing to keep prices down?

[Shane Shiflett]

Some retailers, most of them that we've looked at and who we've talked to, they have pause shipments coming from China and other countries. They pulled some forward so that they're relying on some existing inventory so they don't have to raise prices and some have even cut back on in office perks as sort of a cost cutting measure to be able to keep prices low in their stores. And many of the retailers are also pressuring their suppliers to keep prices low by shouldering the costs and absorbing the costs of tariffs, essentially.

[Alex Osola]

And how are those suppliers reacting to that? What's the relationship like?

[Shane Shiflett]

Suppliers are negotiating, but the retailers are in a position of power for the most part when it comes to these negotiations. Walmart is saying they're trying to work with their suppliers. It's not us versus them, but obviously those costs have to be made up somewhere and Walmart's not going to absorb all of them. So they're not letting their prices increase. So those suppliers are going to have to eat the costs in some way.

[Alex Osola]

Amazon in particular works with a lot of independent merchants who sell goods through the site. What part are they playing?

[Shane Shiflett]

Independent merchants make up a huge portion of Amazon sells. It's something like 60%. These are independent companies who sell on Amazon and use its site to reach consumers. So they're working inside Amazon's system, which is tracking how much they're changing their prices and how quickly they're changing prices. So when they try and increase their prices, some of them have tried to increase their prices by as much as 30%. Amazon will take steps to essentially de emphasize them. They'll also take steps to de emphasize them if they raise their price well above what can be found elsewhere online. So they're really playing by Amazon's rules for a lot of these smaller third party sellers that are working on the site.

[Alex Osola]

Of course, China is a powerhouse in manufacturing. So how are American companies dealing with that?

[Shane Shiflett]

In particular, we've been tracking some 10,000 products since early January. A majority of those products that are on store shelves, they do come from China. So obviously there's a very big impact there. Retailers, suppliers and manufacturers all have this additional cost that has to be borne by somebody. And so even though, you know, in the last Trump administration, during the last round of tariffs, some companies did diversify their supply chains and move to other countries, China is still a major player here. And those tariffs are definitely going to raise the prices of some products. We're already seeing it in some cases with certain types of electronics chargers, Bluetooth speakers. The full impact of those tariffs is yet to be seen. But it is something that will eventually appear in the prices that Americans pay for products on the store shelves of Walmart, Target or online. And Amazon.

[Alex Osola]

That was Wall Street Journal reporter Shane Shiflett. Shane, thanks so much.

[Shane Shiflett]

Thank you.

[Pierre Bienname]

United Parcel Service says it's cutting 20,000.

[Alex Osola]

Operational positions this year.

[Pierre Bienname]

In a move to slash expenses.

[Alex Osola]

After breaking ways with Amazon, its biggest customer, UPS has been looking to shrink.

[Pierre Bienname]

Its oper after deciding in January to.

[Alex Osola]

Reduce the number of packages it delivers for Amazon. The E commerce company accounted for about 12% of UPS revenue.

[Pierre Bienname]

UPS has nearly 490,000 employees.

[Alex Osola]

Most of these are represented by the Teamsters. The union didn't respond to requests for comment.

[Pierre Bienname]

Executives at the delivery company said it's going to be less dependent on labor, which includes adding automation to its facilities for tasks including label application, as well as loading and unloading trailers. Amazon launched 27 satellites into space last.

[Alex Osola]

Night, a small step in its goal.

[Pierre Bienname]

To compete with SpaceX's Starlink and other.

[Alex Osola]

Fleets that provide Internet access from above.

[Pierre Bienname]

Amazon executives have said the company plans.

[Alex Osola]

To invest more than $10 billion in Project Kuiper. Micah Madenberg covers the business of space for the Wall Street Journal, and he.

[Pierre Bienname]

Says Amazon needs to quickly manufacture and deploy thousands more satellites on a narrow timeline.

[Micah Madenberg]

In order Amazon is trying to build a low earth orbit satellite network. These are satellites that are relatively close to the globe. You need thousands of them to provide coverage, but the advantage if you get thousands of them up is that you can offer higher speeds and lower latencies. More broadly, the company is looking for another big franchise to support all of the other ventures and businesses like the E Commerce side, Amazon Web Services, et cetera that it already has. The clear market leader right now is Starlink network. More than 7,000 satellites are already up. It has millions of users around the world, most of them in the US And a big and growing business among corporate and company clients. Other governments and companies are building their own low earth orbit networks, including Canada based Telesat. In Europe, governments and satellite companies are working on a new government oriented system that would include a low earth orbit layer. And there's at least a coup other Chinese LEO networks in the works as well.

[Alex Osola]

Coming up, BP pledges to boost US Fossil fuel production as it slashes its green energy investments. That's after the break.

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[Pierre Bienname]

BP said today it aims to boost its U.S. production of oil and gas by more than 50% by the end of the.

[Alex Osola]

Decade, aligning itself with President Trump's mantra of Drill Baby Drill, the British company reported today a sharp drop in its first quarter underlying replacement cost profit, a metric similar to net income that US companies report at $1.38 billion.

[Pierre Bienname]

The figure is just over half what.

[Alex Osola]

BP reported in the same period last year. Matthew Dalton covers energy for the Wall Street Journal, and he joins me now. Matthew, what's BP aiming to achieve here?

[Matthew Dalton]

Well, they have shifted away from a strategy of investing in a broad suite of different energy technologies, from renewables such as wind and solar, to they've really pivoted sharply towards just oil and gas, towards really getting out of the green energy business. They've said that they're going to direct most of their capital expenditure towards the traditional fossil fuels industries. And they're doing this because Wall street investors really haven't rewarded them for having this less focused approach that they're now pursuing. They say there are other companies that are going to be investing in green energy, but that's not going to be our focus.

[Alex Osola]

And indeed, they're looking to boost US production from 650,000 barrels a day to more than a million by the year 2030. How are they planning to do that?

[Matthew Dalton]

They're going to be shifting a lot of their capital expenditure to spending on those things in the US the US as a whole represents about 60% of BP's overall business. So it's, you know, it's a logical place for them to be investing. The CEO told me that they're going to be boosting production both onshore and in the Gulf of America, as he called it, taking President Trump's preferred term for the Gulf of Mexico. He said that the company was very much aligned with President Trump's call to drill, baby, drill and really boost oil and gas production. Of course, they're facing right now an environment in which crude oil and natural gas prices have really slumped as a reaction to the Trump administration's tariff plans, really throwing a lot of doubt on the global oil market because people think that these tariffs are going to really slow growth on a global scale.

[Alex Osola]

Matthew Dalton covers energy for the Wall Street Journal. Matthew, thanks so much.

[Matthew Dalton]

Thanks a lot.

[Pierre Bienname]

Stocks climbed today after U.S. commerce Secretary Howard Lutnick told CNBC he's reached a trade deal with an unnamed country. A deal on tariffs with even one nation could be seen by investors as much needed progress. The Dow increased 3/4 of a percentage.

[Alex Osola]

Point, while the NASDAQ composite closed up about half a percent. The S&P 500 ended the day up about half a percent as well.

[Pierre Bienname]

But despite that, it recorded its biggest loss in the first 100 days of.

[Alex Osola]

A new presidential term since Richard Nixon's in 1973.

[Pierre Bienname]

China signaled its resolve to stand up to President Trump's efforts to pressure Beijing.

[Alex Osola]

Into a settlement on trade, vowing in.

[Pierre Bienname]

A social media video to resist US.

[Alex Osola]

Coercion and urging other countries to also resist.

[Chinese Foreign Ministry Spokesperson]

China won't kneel down because we know standing up for ourselves keeps the possibility of cooperation alive while compromise snuffs it out. China won't back down, so the voices of the weak will be heard, bullying will be stopped, and justice will not disappear from the world.

[Pierre Bienname]

In a version narrated in Chinese and another in English, the Chinese Foreign Ministry denounced what it calls bullying tactics designed to shore up American hegemony. The video comes as President Trump has struck a softer tone on trade tensions.

[Alex Osola]

With China in recent days, fueling some.

[Pierre Bienname]

Optimism that the two governments could start.

[Alex Osola]

Hashing out a potential deal.

[Pierre Bienname]

The video, however, suggests Beijing isn't prepared.

[Alex Osola]

To blink first in the trade standoff. And that's what's news for this Tuesday afternoon. Today's show was produced by Anthony Bansi with supervising producer Michael Kosmides. I'm Pierre Bienname for the Wall Street Journal.

[Pierre Bienname]

We'll be back with a new show tomorrow morning.

[Alex Osola]

Thanks for listening.