Jim Cramer, a financial commentator, says Walmart shows resilience amid the pressure of US-China tariffs.

Well-known financial commentator Jim Cramer mentioned on CNBC that despite the high tariffs imposed by the United States on Chinese goods, Walmart and two unnamed retailers remain competitive. Walmart reported earnings of 61 cents per share in the first fiscal quarter of 2025, which exceeded expectations. Walmart tackled tariff pressures by adjusting its product mix and maintaining supply chain flexibility. Its advertising and subscription services offer additional revenue streams, with approximately two-thirds of its products being sourced from the United States, which helps reduce the impact of import tariffs.

Retail Challenges Under Tariff Pressure

In May 2025, although the United States and China reached a 90-day temporary tariff ceasefire agreement, reducing tariffs on some Chinese goods from 145% to 30%, the overall tariff level remains elevated. According to Walmart CFO John David Rainey, even after the tariff reduction, "overall tariffs remain high," making it difficult for retailers and suppliers to fully absorb the costs. Price increases are expected to start appearing by the end of May, with a more pronounced impact in June.

This policy environment has already put pressure on the overall U.S. retail market. According to data from the U.S. Department of Commerce, retail sales in April 2025 increased by only 0.1% month-on-month, far below the 1.7% in March. Core retail sales (excluding automobiles, fuel, building materials, and dining) even decreased by 0.2% month-on-month, indicating a slowdown in consumer spending momentum, closely related to the impact of high tariff policies on the prices of imported goods.

Walmart's Financial Report and Strategic Response

Despite facing the dual challenges of tariffs and weak consumer demand, Walmart still delivered some standout results in the first fiscal quarter of 2025. The company reported earnings per share of 61 cents, better than the market expectation of 58 cents, and reaffirmed its unchanged full-year financial forecast, expecting sales growth of 3% to 4% and earnings per share between $2.50 and $2.60.

However, revenue growth of 2.5% year-on-year fell short of expectations, marking the first time since 2020. U.S. same-store sales grew by 4.5%, while Sam's Club grew by 6.7%. E-commerce performed strongly, with U.S. e-commerce sales growing by 21% year-on-year and global e-commerce sales by 22%, achieving simultaneous profitability in both the U.S. and globally for the first time, mainly from high-margin businesses such as advertising and third-party platforms. Sales on the Walmart Connect advertising platform grew by 31% year-on-year, indicating the company's active expansion of non-traditional retail revenue sources.

In terms of supply chain strategy, Walmart has not canceled orders but has reduced some procurement quantities and adjusted its product mix to respond to changes in demand. CEO Doug McMillon pointed out that toys and electronics from China remain the largest source of cost pressure, and tariffs from countries like Costa Rica and Peru have also driven up prices for food items like bananas and coffee. Nevertheless, the company is still striving to maintain some price stability, such as keeping flower prices unchanged at Sam's Club during Mother's Day.

Cramer's View: Walmart's Resilience

Jim Cramer stated on CNBC that Walmart has a "robust balance sheet" and "close relationships with suppliers," giving it greater adaptability in the face of tariff pressure. He noted that Walmart can absorb some cost pressures through product mix adjustments and flexibility in its supply chain, and raise prices within an acceptable range when necessary.

Cramer also emphasized that Walmart's advertising and subscription services (such as Walmart+) provide additional profit sources, allowing it not to rely solely on product sales to maintain profitability. The growth of these high-margin businesses helps alleviate the pressure from tight retail profit margins.

Additionally, about two-thirds of Walmart's products come from the U.S., which means it is relatively less directly impacted by rising tariffs on imported goods. According to the company, price increases will mainly focus on general merchandise categories, while food prices will be kept as stable as possible.

Other Retailers' Response Strategies

In addition to Walmart, other major retailers are also adjusting their strategies to cope with tariff pressure. According to a report by logistics company Portless, many U.S. retailers quickly restocked their inventory of Chinese-made goods, including sleeveless dresses, swimwear, slippers, and sunscreen, following the tariff suspension. This wave of restocking has not yet caused a significant rise in shipping costs, but analysts point out that if orders continue to rise, supply chain bottlenecks may re-emerge.

Furthermore, some retailers are considering adopting a "nearshore outsourcing" strategy, shifting part of their supply chain to countries like Mexico with free trade agreements (FTAs) to reduce tariff risks and enhance supply flexibility. Although this strategy requires time and resource investment, it has become one of the long-term approaches to dealing with trade uncertainties.

Jim Cramer, a financial commentator, says Walmart shows resilience amid the pressure of US-China tariffs.

Key Updates

Walmart's announcement of a price increase at the end of May, due to the new US tariff policy, led to a 4% drop in its stock price.