Greg Sargent: This is The Daily Blast from The New Republic, produced and presented by the DSR network. I’m your host, Greg Sargent.
Lindsay Owens: Thanks for having me.
Owens: Yeah. Look, Trump is clearly worried. This was a bombshell admission from Walmart in an earnings call that consumers were going to need to brace for impact. A large retailer known for offering low prices [and] bargains was signaling to the American people that prices were going to come up, and they were letting you know it’s not because they have shifted their position on no longer being a low-cost retailer; it’s because of Trump’s tariffs. They were quite clear on who was to blame. Not surprisingly, Trump really lashed out and basically said that he felt like Walmart was a profitable company. Yes, prices would rise because of tariffs—that was implicit in his tweet—but they shouldn’t pass them along. They should “eat” them. It was really a smoking gun that Trump is actually crystal clear on who pays the price of his tariffs.
Owens: Absolutely. And remember, this is all in the context of an economy and a political climate in which the number one issue is still high prices. This was a problem for Biden. Trump is very aware of that. He exploited it and ran on bringing prices down. And one of the first policies he implements is basically a giant price hike on the American people. And now he’s reeling from the consequences. We know the American people are crystal clear on this. Polling from Navigator shows that two-thirds of Americans expect the tariffs to increase their prices. Eighty percent of Americans are clocking the tariffs; this is not something that people aren’t aware of. He’s in real trouble here—and he’s screaming from the bully pulpit that corporations could help him alleviate the impact of his policies.
Karoline Leavitt (audio voiceover): The president is committed to ensuring that prices remain low for American consumers, and he maintains the position that foreign countries will absorb these tariffs.
Leavitt (audio voiceover): He’ll be watching, seeing what they’re doing.
Owens: Look, one of the main reasons that China is interested in seeing tariff rates come down is not just because they’re not going to be paying them but rather because a lot of American companies will just not buy goods at that rate. The original tariff rate that we were contemplating in the Trump administration really wasn’t a tariff rate at all. It was effectively an embargo. There are some goods at which you cannot sell at certain price points. Americans aren’t going to spend $40 on a can opener. That’s an embargo, not a price hike.
Sargent: Exactly. Can you talk us through the broader economics of this as well? There was some talk that Walmart might not have to raise prices due to the tariffs because they sell a lot of groceries, many of which are domestically produced. So what does it mean for the economy and the impact of Trump’s tariffs that Walmart is now saying, in spite of all that, that prices will go up? This is a bit of an indicator for the rest of the retail industry and for the economy more broadly, right?
Sargent: Can you explain that a bit more? I’m curious about this notion that Walmart has more leverage than all the little shops and littler businesses. How does that play out exactly? Why is this such a clear indicator?
Sargent: So if I understand you correctly, what you’re saying is that because of Walmart’s clout and size and leverage, it can essentially say to suppliers—i.e., the importers who are bringing in products that are tariffed—Keep those prices down. And if they can’t do that, then nobody else can, right?
Sargent: And Walmart is a huge presence in red and MAGA America as well. I think we should talk about that component of it too.
Sargent: That’s such an interesting point. The very fact that Walmart is such an omnipresence in red America and MAGA America itself shows that the tariffs are going to really start shifting opinion among his core supporters.
Well, that’s not exactly right. They have an obligation to present materially significant and relevant information to their investors. So when they are letting their investors know that price hikes are coming, it’s because they do indeed plan to raise their prices. This isn’t a negotiating strategy with Trump, as it were. They’re just stating the facts to their investors, letting them know that they expect price hikes—and what they expect those price hikes to mean, which is potentially a decline in sales volume; that they are going to price out some customers from various goods and they may see a decline in their net sales in the future.
Owens: Yeah. The story of the Trump administration so far, in part, has been somewhat similar to what we saw in the Biden administration—in that we have what you might think of as a “vibecession.” So the hard data: The jobs numbers are still in a reasonably robust place thanks to the economy that Trump walked into; the inflation numbers are OK for now too; jobless claims—things like that—are relatively fine. Where you see real trouble in the waters is things like consumer confidence. We saw again last week another drop in confidence. It’s just been really stunning to see how concerned American consumers are, how pessimistic American consumers are about the current state of the economy—but also [that] their forward-looking outlook is quite negative as well.
I will say it’s not just the tariffs that are potentially going to result in high prices for Americans. There are a whole host of other policies moving through Congress right now, which, if they are signed into law, will also result in high prices. We heard the press secretary talk a little bit about Trump’s strength on energy prices, but it’s actually the case that the cost of electricity and utilities is up over inflation year over year. We just heard last week that the Rhodium Group, one of the big analysts who looks at climate and energy, is predicting that utility prices could increase 7 percent for American families if some of the repeals to the Inflation Reduction Act are signed into law. You’ve got a president who knows his voters are very concerned about high prices. He’s certainly not acting like it. He’s pursuing a whole host of policies that go in the exact opposite direction. And it’s not just the tariffs; it’s really across his administration. We’re seeing the possibility of higher prices still.
Owens: Yeah. Look, the first thing I’ll say is I think Trump’s likelihood of success here is slim to none. Walmart is a major Fortune 500 American company, one of the largest grocers in the U.S., and one of the only retailers in a lot of quarters and pockets of the U.S. They are pretty focused on the consumer, and they’re pretty focused in these earnings calls—and when they’re making decisions—on seeing strong returns, right? That’s what their investors are interested in, that is what their shareholders are interested in, and that’s what they are interested in as well. That’s who they view as some of their key stakeholders, so I think Trump threatening Walmart is really unlikely to be successful. They are not focused on the public policy goals of their work; they’re focused on revenues. And so they are not going to be eating tariffs. They’re going to be passing them along to the extent that they can.
Companies know that and in the haze and in the mirage, they’re going to exploit it. So companies who actually now are no longer subject to considerable tariffs may very well raise their prices, too, because they know consumers are expecting it. And Trump has made the issue so salient that it is very easy to do. As you saw from the Walmart earnings call, people are going to blame the tariffs regardless of what the cause is. And so it’s really interesting that Trump himself has undermined his position here because he’s created the perfect atmospheric conditions for exploitation.
Owens: Absolutely. And we’ve heard CEOs say, People are expecting higher prices. They’re not fully tracking the shifts. We had already announced this level of pricing. We’re going to stay the course and see how we do.
Owens: Thanks for having me, Greg.
Sargent: You’ve been listening to The Daily Blast with me, your host, Greg Sargent. The Daily Blast is a New Republic podcast and is produced by Riley Fessler and the DSR Network.
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