Experts say Walmart’s tariff-driven price increase gives other retailers cover to follow suit.
Full Video Transcript Below:
SUCHARITA KODALI: I do expect other retailers to follow in Walmart’s steps, in large part because once a large global retailer like Walmart is able to come up and say that this is what we are planning on doing and it is inevitable, it almost gives permission for the rest of the retail industry to do the same. And ultimately, if Walmart is the price floor for a lot of goods, it gives permission for everyone else who competes with Walmart to also raise the price of their goods in lockstep. So I absolutely do expect others to make similar announcements.
Now, what is interesting is all. What is this impact going to have on inflation. Because once you raise prices you absolutely lead to more inflation. If you lead to inflation, you typically are going to force the Fed’s hand to also raise interest rates to keep inflation in check. And if that set of dominoes all fall, then we may have another downturn. And that would make the likelihood of a recession probably higher. So there’s still a lot that remains to be seen. The one piece of the calculation, because I do think a lot of the goal tariffs is to realign global trade and to make the U.S. more competitive and to truly put American, American consumers and even American businesses in a more favorable position.
But one I think unintended consequence will be if so many businesses like Walmart and others are so spooked by tariffs that they raise their prices and if they raise their prices. Even before tariffs have the ability to have an impact on their actual prices. We end up with a similar inflation spiral to what we had a few years ago. And that was not a great time for either the economy or consumer confidence or the stock market. And we may see essentially a redux of that.
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