Walmart CEO warns customers might pay if trade tensions escalate

Walmart Inc. customers haven’t felt the effects of the trade war between the U.S. and China yet, but Chief Executive Doug McMillon says that could soon change.

Speaking Thursday to CNBC, McMillon said Walmart WMT, -0.55%  may have to raise prices if President Donald Trump carries out threats to hike tariffs on Chinese goods next year.

McMillon said the retail giant has managed to hold prices for now, but that can’t last forever.

“We try to go up as little as we can and as late as we can for customers, but there are some categories where over time this will show up,” he said.

McMillon said Walmart is starting to explore other options for its supply chain, since China is the No. 2 source of its goods.

Earlier this week, Wells Fargo analysts said Walmart and rival Target Corp. TGT, +0.33%  are among the retail brands that stand to benefit the most from 90-day the tariff truce announced at the G-20 meeting last weekend. Trump also said he would hold off on imposing tariffs on an additional $267 billion of Chinese goods. But that truce may be more complex, and more fragile, than first believed.

“The worst-case scenario, a 25% tariff on all products sourced from China, without mitigation, would have represented a median earnings headwind of 40% for the mass merchants and dollar-store names,” the Wells Fargo analysts wrote Monday.

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