Walmart says it will likely use recently issued tariff refunds to lower prices as shoppers grow more cautious amid rising fuel costs. Company executives told investors the refunds — returned to importers after the Supreme Court struck down most of last year’s higher customs fees — could be funneled into price investments at stores and gas stations.
Chief Financial Officer John David Rainey said a new pattern at Walmart pumps signals financial stress for some customers: for the first time since 2022, many shoppers have begun filling up with fewer than ten gallons. “That’s an indication of stress,” he said, and added that while higher-income customers continue to spend with confidence, lower-income shoppers are increasingly budget-conscious and, in some cases, navigating financial distress.
On the company’s earnings call, Rainey said the firm believes “the single best return that we can have on a dollar of capital right now is to invest in the customer, invest in price.” He noted Walmart’s stores and fuel stations have been drawing deal-seeking shoppers. U.S. sales at Walmart rose 4.1% in the February-through-April period.
Rival retailers including Home Depot, Target and Lowe’s also reported sales growth in their latest quarters and indicated that slightly larger tax refunds this year have helped offset some household budget pressure. Federal data show retail and online spending in April was up 5.2% year over year, outpacing inflation, while spending at gas stations jumped about 21% as pump prices climbed.
Still, Walmart executives warned that sustained high fuel costs could eventually push up the prices customers see on store shelves. International supply risks are contributing: the U.S. conflict with Iran has disrupted tanker traffic through the Strait of Hormuz, a key route for fuel and for fertilizer shipments used in agriculture. Those disruptions, along with other factors, helped push U.S. inflation in April to its highest level in three years, with energy a major driver.
As of Thursday, the national average price for regular gasoline was $4.56 per gallon, roughly $1.38 higher than a year earlier, according to AAA. Major retailers have so far absorbed much of the increased transportation and shipping costs; Walmart reported a notable hit to income from higher fuel expenses in the quarter. Home Depot told investors it might use its own tariff refunds to offset mounting fuel costs.
Retailers now face a tradeoff: absorb rising logistical and energy costs or pass them on to customers. Walmart’s move to direct tariff refunds into price reductions signals a strategy to protect value-conscious shoppers and preserve traffic, particularly among customers feeling the most strain.