Walmart makes surprising decision that may shock consumers

It’s hard to read the news these days without seeing Walmart’s name in the mix.

Walmart has been front and center in the tariff debate. During the company's May 15 earnings call, CEO Doug McMillon warned consumers about potential price hikes related to tariffs.

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“Given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins,” he acknowledged.

Washington wasn't happy with Walmart's warning, though.

In response, President Trump told the company it should “eat the tariffs” and not charge customers more for its products.

Walmart will no doubt do everything it can to avoid raising prices. But to a degree, the retail giant’s hands may be tied.

Walmart makes a surprising decision that may shock consumers.

Image source: Tim Boyle/Getty Images

Walmart has a plan for battling tariffs

Some retailers are going to have an easier time than others absorbing tariff-related increases.

Walmart has an advantage in that regard for two reasons.

First, its status as a retail giant puts it in a great position to negotiate prices and, as necessary, dump inventory it can't source at a reasonable price.

Secondly, Walmart gets about 60% of its inventory from U.S. small businesses. And the company is taking steps to increase that percentage by promoting its Grow With Us program, which is designed to give small businesses the tools and resources needed to become a Walmart supplier.

If Walmart is able to decrease its dependence on goods produced overseas, it can edge out other retailers in the face of tariffs while protecting its customers from unwanted price hikes.

Walmart makes a surprising decision

Walmart announced that it's laying off about 1,500 corporate employees as part of a broader restructuring.

In a memo to employees, Walmart U.S. CEO John Furner said the company is reshaping some of its teams to modernize its business and enhance the customer experience.

“We are eliminating roles as well as opening some new roles aligned with our business priorities and growth strategy,” the memo said.

The layoffs will mostly impact teams in Walmart's advertising business, global technology operations, and U.S. e-commerce fulfillment centers.

This isn't Walmart's first round of layoffs this year. In February, hundreds of Walmart employees got the axe as the company shuttered its North Carolina office.

Of course, the first question that comes to mind in all of this is whether Walmart's layoffs were spurred by tariff-related concerns. But the company insists that tariffs did not play a role in its decision.

Walmart employs about 1.6 million U.S. workers, making it the largest private employer in the country.

But while the company might claim that tariffs didn’t fuel this recent round of layoffs, it’s hard to overlook the fact that the decision comes at a time when retailers and consumers alike seem to be worried about price increases. And it’s a decision that might rattle consumers, since it suggests financial concerns.

It also begs the question as to whether more major retailers will be making plans to lower their headcounts in this time of economic uncertainty.

During its May earning call, Walmart rival Target said it expects sales to decline in 2025 due to factors that include uncertainty around tariffs. Other retailers have also changed their outlooks for the negative.

More retail:

Tariffs between the U.S. and China are in the midst of a 90-day pause. But what happens after that is anyone’s guess. Being cautious with headcount is yet another way retailers can try to soften the blow tariffs might bring later on this year.