LEILA FADEL, HOST:
Are prices rising because of tariffs?
MICHEL MARTIN, HOST:
This week, we heard an answer from some of the largest retailers in America, including Walmart, Home Depot and Target.
FADEL: NPR's Alina Selyukh has been listening to those companies' earnings calls and is here in studio with her takeaways. Good morning.
ALINA SELYUKH, BYLINE: Good morning.
FADEL: OK. So what's the answer? What have the big retailers been saying?
SELYUKH: Many are acknowledging that they are indeed raising some prices...
FADEL: OK.
SELYUKH: ...Because of tariffs, but they are really playing it cool. Like, it's pretty minor for now. It is worth noting there is a bit of a political context here. Back in May, when Walmart issued a pretty clear warning that tariffs would lead to higher prices in a matter of weeks, President Trump posted online in all caps that Walmart should stop blaming tariffs and, quote, "eat the tariffs." So now big retailers are giving us more measured and nuanced takes. Home Depot, for example, has been saying no broad-based price hikes were happening, but some prices are up. Some items are getting switched out on shelves. That sort of thing.
FADEL: OK. So they're playing it cool, but are companies doing what Trump said they should - eating the tariffs?
SELYUKH: Oh, definitely. We saw carmakers go this route. For example, General Motors took more than a billion dollars in tariff costs as a hit to profits. Many big retailers also spread the pain and made their suppliers eat some of the costs in addition. But the main thing that many retailers have been doing is stockpiling. Companies from Target to dollar stores to Home Depot, they all brought into the U.S. as much as they reasonably could before tariffs kicked in. And now Walmart CEO Doug McMillon told investors this week pretty pointedly that these stockpiles are running out.
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DOUG MCMILLON: But as we replenish inventory at post-tariff price levels, we've continued to see our costs increase each week, which we expect will continue into the third and fourth quarters.
SELYUKH: OK. It may not sound...
FADEL: (Laughter).
SELYUKH: ...That pointed, but this is quite direct for corporate-speak. He's saying the cost for Walmart to replenish its supplies is getting pricier by the week.
FADEL: OK. So that seems to suggest higher prices aren't here yet, but they're coming. Is that influencing shoppers at all?
SELYUKH: On this, I can cite Walmart CEO McMillon again. He said tariffs took so long to roll out that shoppers have not changed their behavior in any dramatic way yet.
FADEL: OK.
SELYUKH: People, especially with higher incomes, seem to be feeling spendy. For example, take furniture. It was fairly quickly affected by tariffs. Prices went up. People bought less of it. But then in July, federal data showed people bought more furniture again.
FADEL: Interesting.
SELYUKH: With cars and trucks, right now auto sales are going strong thanks to car prices that have stayed pretty steady. But it also, I think, feels a bit like suspended reality. It's all being propped up by wage gains of recent years and what had been a strong labor market. But we've started to get some economic indicators showing cracks in the jobs market. And inflation, of course, has been chipping away at the wages' buying power.
All of this, by the way, is in focus today because of a big speech by Federal Reserve Chairman Jerome Powell. He's giving his final appearance as Fed chair in Jackson Hole, Wyoming. But the biggest question hanging over this is, how long until companies decide they cannot afford to eat the tariffs anymore?
FADEL: And really quickly, what's the answer?
SELYUKH: Probably not forever. And imagine - shoppers know this, which is why Home Depot says right now, the No. 1 thing that still keeps people from spending more is economic uncertainty.
FADEL: NPR's Alina Selyukh. Thanks, Alina.
SELYUKH: Thank you. Transcript provided by NPR, Copyright NPR.
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