Walmart Inc. (WMT) warned last week that it will have to raise prices because of President Trump's tariffs. On Saturday, the president advised the country's largest retailer that it should “eat the tariffs.” The problem: Retailers operate with very thin profit margins, writes Ed Yardeni, editor of Yardeni QuickTakes.
If they don't raise their prices, they stand to lose money on their sales. That's not a sustainable business model.
Earlier this month, Ford Motor Co. (F) raised prices on three models assembled in Mexico as a result of Trump's tariffs on imported autos. Meanwhile, recent Subaru price increases will add between $750 and $2,055 to vehicles depending on the model and trim, according to a notice posted on a dealer website. The price increases are expected to hit vehicles on dealer lots starting in June, according to the notice.
At the same time, the bond market may be starting to anticipate a bout of higher inflation in coming months. It also got hit on Friday with Moody's downgrade of the credit rating of US government debt. In addition, bond investors are closely and nervously monitoring budget talks in Washington.
The Committee for a Responsible Federal Budget observes that the House is considering a reconciliation package that is shaping up to add $3.3 trillion to the federal government's debt over a decade as written — or $5.2 trillion if temporary provisions are made permanent.
