Walmart Absorbs Tariff Hikes to Keep Prices Low for Customers

As of August 23rd, 2025, Walmart Inc. has just reported another quarter of healthy sales growth, but its profits fell short of Wall Street expectations. The massive big-box retailer saw its comparable US sales rise 4.6% in the quarter ended July 31st, 2025, exceeding analyst predictions and significantly outperforming its struggling rival Target, which saw a 1.9% drop.

However, Walmart's profits missed the mark due to a variety of factors, including the company's decision to absorb the costs of tariffs on certain items rather than passing them on to consumers. Walmart's CEO, Doug McMillon, told investors that the retailer is "keeping our prices as low as we can for as long as we can" despite the tariff-related cost pressures.

Walmart's finance chief, John David Rainey, revealed that prices in the US rose by 1% during the quarter, and the company chose to take a hit to its margins on some goods while passing on the higher costs to consumers on others. Rainey explained that Walmart has been managing the impact of tariff hikes through strategies like accelerating imports and offering temporary "Rollback" items.

Despite the challenges posed by the ongoing trade tensions, Walmart's CEO expressed confidence in the company's ability to navigate these periods of cost increases, citing the expertise of its buyers and the retailer's strong relationships with suppliers. Walmart's enormous clout with vendors, who rely on the retailer for a significant portion of their sales, has also helped the company persuade them to shoulder some of the burden.