Former President Donald Trump's recent comments about Walmart have ignited yet another firestorm in the already smoldering debate over who actually bears the cost of tariffs. And honestly? It's a mess.
Trump took to Truth Social—his preferred digital megaphone—suggesting that retail giant Walmart should simply "swallow the tariffs" rather than passing costs to consumers. After all, he argued, they "made a fortune last year."
I've been covering economic policy for years, and this argument has all the economic sophistication of suggesting we could solve inflation by simply asking companies to charge less. It just doesn't work that way.
Treasury Secretary Besant scrambled to do damage control Sunday. He claimed to have personally spoken with Walmart's CEO, assuring the public that price increases represent merely a "worst-case scenario." (Have you noticed how often "worst-case scenarios" seem to materialize in economics? Just saying.)
Look, the reality about tariffs isn't complicated. They're taxes on imports—full stop. Companies facing these additional costs have limited options: eat the costs (goodbye profits), pass them to consumers (hello inflation), find different suppliers (easier said than done), or some messy combination thereof.
Walmart, with margins thinner than dollar-store toilet paper on many everyday items, has historically been... let's say reluctant... to absorb such costs.
There's something almost refreshingly consistent about politicians suggesting someone else should bear the financial burden of their policy decisions. It reminds me of a dinner guest who orders the lobster, then suggests the host should pay because, well, they have a good job!
When I reached out to retail analysts about Trump's suggestion, one laughed so hard I thought they might need medical attention.
Walmart executives haven't minced words: continued tariff increases will lead to higher prices. Period. This shouldn't shock anyone familiar with retail economics or, frankly, basic math.
What's fascinating here—and what I've observed covering Trump since his first campaign—is the collision between populist messaging and corporate reality. The former president has maintained his working-class champion persona while advocating policies that economists broadly agree lead to higher consumer prices. It's a high-wire act requiring a consistent rotation of scapegoats when predictable consequences arrive.
Meanwhile, Trump continues pressuring the Federal Reserve to cut interest rates faster than a barber with a train to catch. His dissatisfaction with Jerome Powell remains one of the few constants in his otherwise mercurial political messaging.
The contradiction is striking. Trump wants significant tariffs (inflationary) AND aggressive rate cuts (potentially inflationary). It's like stepping on the gas and brake simultaneously, then complaining about the bumpy ride.
Between domestic economic pronouncements, Trump somehow found time to visit the Middle East to discuss AI partnerships, with tech giants Nvidia and AMD joining the conversation. Busy man.
So who really pays for tariffs? This isn't exactly economic rocket science. Research consistently shows American importers and consumers bear most tariff costs. A 2019 study by economists at Princeton, Columbia, and the Federal Reserve found that "the full incidence of the tariff falls on domestic consumers, with no impact on the prices received by foreign exporters."
But dry economic reality rarely makes for compelling political theater, does it? It's much more satisfying to point fingers at a corporate behemoth and suggest they should "just deal with it" because they had a good year.
Never mind that publicly traded companies have fiduciary responsibilities to shareholders that might complicate the "just eat it" approach. (Though I've yet to meet a shareholder who volunteers to see their dividends cut.)
As for Moody's downgrade of U.S. credit—which Besant downplayed with the enthusiasm of a teenager asked about homework—it's just another reminder that economic decisions have consequences beyond election cycles.
The whole tariff debate ultimately reflects a broader problem with how we discuss economic policy. Rather than honest conversations about real costs and trade-offs, we get theatrical productions where corporations become cartoon villains for responding predictably to tax increases.
Maybe—just maybe—we could acknowledge that policy decisions come with costs and then debate whether those costs are worthwhile?
Nah. Where's the fun in that?
