Who eats the tariffs? Importers will pay the import duty imposed by the US government. Businesses purchasing foreign-made goods will then decide to either absorb the levies in the form of lower profits or pass the costs on to their customers. Exporters might also pay the tariffs by lowering prices to remain competitive in the global marketplace. Ultimately, it should not be surprising that American companies are beginning to raise their prices, something that has irked the White House.
Will Corporate America Eat Tariffs?
In a weekend Truth Social post, President Donald Trump lambasted Walmart for planning to raise prices on some of its products in response to tariffs. “Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain,” Trump said. “Between Walmart and China they should, as is said, 'EAT THE TARIFFS,' and not charge valued customers ANYTHING. I’ll be watching, and so will your customers!!!”
This was the third time the president or the current administration slammed a US company for a tariff-related decision.
Last month, Amazon reportedly planned to display an additional tariff charge next to the listed price on its Haul platform. The White House press secretary, Karoline Leavitt, called it a "hostile and political act." The website quickly confirmed this feature was not being installed.
Mattel, the Barbie and Hot Wheels maker, says it would likely increase prices. In a recent interview with CNBC, Mattel CEO Ynon Kreiz even noted that the president's manufacturing aims are unlikely to materialize. This prompted a strong rebuke from Trump. “We’ll put a 100% tariff on his toys, and he won’t sell one toy in the United States, and that’s their biggest market,” Trump said. “I wouldn’t wanna have him as an executive too long.”
Others, including Stanley Black and Decker, Birkenstock, and Pandora, have admitted they will hike prices in the coming months. However, one US corporation may have gotten the hint.
Home Depot CFO Richard McPhail confirmed to the business news network that the retailer does not intend to increase prices on account of tariffs. "Because of our scale, the great partnerships we have with our suppliers and productivity that we continue to drive in our business, we intend to generally maintain our current pricing levels across our portfolio," McPhail stated.
According to a new survey by Allianz, more than half (54%) of US companies say they will raise prices to cover the costs associated with President Trump's tariffs. Fewer than a quarter (22%) noted they can absorb the higher costs. Consumers also anticipate higher prices, with a treasure trove of surveys indicating that Americans project a rise in inflation.
How Are Consumers Feeling?
Speaking of the consumer, a new report suggests shoppers are beginning to sit on the sidelines.
A new Bank of America Institute study found that seasonally adjusted spending per household was flat in April. This matches last month's Commerce Department data, highlighting a 0.1% boost in retail sales following a 1.7% increase in March.
"The gradual easing in consumer spending momentum is not just due to lower inflation -- the growth in the number of transactions has also cooled," the bank wrote. "Consumers appear to be pulling back particularly on bigger ticket discretionary services like airline tickets and lodging."
Putting the good old credit card on ice is not entirely surprising. The latest Conference Board Leading Economic Index (LEI), a widely watched recession indicator, plunged 1% in April after a 0.8% drop in the previous month. The LEI was the largest monthly decline since March, as "consumers’ expectations have become continuously more pessimistic each month since January 2025." But the panic might be overblown, with recent statistics and various models suggesting subdued inflation trends heading into the summer when the living is easy.
Still, deteriorating consumer confidence in the broader economy could be a self-fulfilling prophecy. If households think the tariffs will doom the United States and choose not to run to the local Walmart or visit Amazon, this could harm the market, two-thirds of which is driven by consumer consumption.
Inflation in Canada
Did you hear? The April headline annual inflation rate in Canada slowed to 1.7%, down from the 2.3% reading in March. On a monthly basis, the consumer price index (CPI) fell 0.1%. Both readings came in slightly higher than the consensus forecast of 1.6% and negative 0.2%, respectively. Core inflation, which omits the volatile energy and food categories, rose to 2.5% year over year and climbed 0.5% from March to April.
The reason this is a riveting CPI report is because of the media’s spin. Before and after the numbers were dropped, the mainstream press, such as the CBC, noted that inflation would ease in April because the Liberal government decided to scrap the consumer side of the carbon tax.
Wait a minute. Eliminating the carbon tax, which the Liberal Party implemented in 2018, lowers inflation but does not increase it? When inflation ravaged the Great White North and made a Tim Hortons Double-Double a few cents more, Canada's government-funded media outlets were quiet about the carbon tax raising prices or business costs.
What’s that aboot, eh?
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