Trump Telling Walmart to "Eat the Tariffs" Acknowledges That His Tariffs Ultimately Hurt the American People

President Trump's tariff tantrums continue. After weeks of duking it out with China on tariffs, Trump went on a rant about Walmart and tariffs on Truth Social. In addition to implying that Walmart makes too much, he said that Walmart should "eat the tariffs" and to "not charge valued customers anything." Forget for a moment that he implicitly threatened a business into telling it how it should handle its pricing strategy or that he peddled a right-winged version of "greedflation", the latter of which is a theory that I debunked in 2022.

By telling Walmart to eat the tariffs, he both shows a misunderstanding of the economics of tariffs and undermined his previous argument for tariffs. Throughout the 2024 presidential campaign, both Trump and Vance continued to claim that it will be other countries that will ultimately pay the cost of tariffs. It is convenient for Trump to forget that he insisted at an August 2024 campaign rally that a tariff is a tax on foreigners. Trump touted tariffs as a magic bullet in which China would bear the brunt of the costs, jobs would magically appear, and the United States would become rich again. Once again, what Trump shows is that he really does not understand how tariffs work. 

The tariffs are paid by the company to Customs and Border Protection (CBP) at a port of entry before the good can enter the United States. That's basic tariff tax collection. Since the vast majority of industries do not have the adequate net profit margin to absorb Trump's massive tax hike in the short-term, it makes sense that passing the costs to the consumer would be a logical business choice, especially since Trump's tariffs are higher and cover a broader base of goods than they did during Trump's first term. As over a dozen academic studies confirmed (also read Tax Foundation research here), the tariffs during Trump's first term were paid for by American consumers and companies. I also covered this topic last year twice (see here and here) because I was hoping that Trump would not double down on tariff tomfoolery. Yet here we are. 

When Trump says "eat the tariffs," what he is really is saying is "the costs are real and you need to suck it up, even if that means paying more." So much for making America great again! Like with any other tax, you cannot tax your way to prosperity. The costs are real. Americans pay for the tariffs in the form of higher consumer prices, lower GDP, lower wage growth, and lower employment. Trump has eroded goodwill and triggered an economic downturn that did not need to happen. The ignorance with which Trump continues with his tariff delusions will ultimately end up being at the expense of the American people and economy, not China.