Walmart said it would use potential refunds on tariffs imposed during the Trump administration to help lower prices as inflation continues to strain household budgets.
On a call with investors Thursday, Walmart said it is working to obtain refunds after the U.S. Supreme Court ruled the president did not have authority to enact tariffs under the International Emergency Economic Powers Act. The ruling frustrated both the Trump administration and businesses, as the court did not outline a process for issuing refunds.
The refunds apply only to those who directly paid the tariffs, not to consumers who may have faced higher prices from companies that passed on the costs. Some companies, including UPS and FedEx, have said they will pass along refunds to customers.
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“We would definitely bias and try to prioritize price investment for that, given what we've seen both in terms of the pressure on consumers from fuel prices, but importantly as well as the retention and the share gains that we've had,” said John David Rainey, Walmart’s chief financial officer. “We think the single best return that we can have on a dollar capital right now is to invest in the customer and invest in price.”
According to the consumer price index released earlier this month by the Bureau of Labor Statistics, prices rose 0.6% in April and are now 3.8% higher than a year ago.
The latest data marked the first time in more than three years that wages failed to keep pace with inflation on a year-over-year basis.
Rainey noted that beyond rising fuel costs, wholesale prices have been affected by the closure of the Strait of Hormuz.
“Obviously, we saw fuel prices go up. And as you think about a category like food, it's heavily dependent upon fertilizer, and nitrogen and phosphates are heavily dependent upon the Strait of Hormuz and the closure there. So, I think it's possible that if fuel prices persist at this level, you may see some upward pressure on average unit retail prices,” he said.
Walmart also reported some positive news: larger-than-expected tax refunds boosted consumer spending. Higher refunds for some Americans this tax season were driven by increases to the standard deduction and changes to taxation on tips and overtime.
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