Walmart will start to hike prices soon in response to the escalating trade war between the U.S. and China, former Walmart U.S. CEO Bill Simon predicted on Friday.
“So far, Walmart’s been able to absorb a lot of the pricing, and the question is how long can they do that and whether they actually should,” Simon said on CNBC’s “Closing Bell.”
“As the cost of goods go up in any other way or any other model, the costs are mitigated and they are passed through … You’ll see Walmart start to do that soon,” he added.
Trump’s latest move came earlier this week, when he announced 10 percent tariffs on $200 billion in Chinese goods. The duties will rise to 25 percent on Jan 1.
Beijing retaliated with tariffs on $60 billion worth of American products.
Walmart wrote its letter to Lighthizer two weeks ago, before the latest tariffs were revealed.
Walmart warned it may hike prices on a wide range of products, including food and personal care items.
“As the largest retailer in the United States and a major buyer of U.S. manufactured goods, we are very concerned about the impacts these tariffs would have on our business, our customers, our suppliers and the U.S. economy as a whole,” Walmart wrote.
Target was also among those pushing back against the tariffs. In its letter, dated Sept. 6, the retailer said it was “deeply troubled” by the trade war, which it said raises prices on everything from backpacks to playpens.
“The prices have to be passed through eventually, and I think most retailers are starting to make plans to do that,” Simon said.
Plus, “for tariffs to have any effect at all the consumer has to feel it and change their buying behaviors so that then retailers and manufacturers would change.”
— CNBC’s Dawn Kopecki and Reuters contributed to this report.