Walmart’s Resilience Faces Tariff Challenge, But Small Businesses Feel the Heat

While Walmart navigates global e-commerce growth and tariff pressures, small businesses struggle with razor-thin margins and mounting costs.

After delivering robust results for its first quarter, which included an eye-opening 22 percent gain in global e-commerce sales, Walmart Inc. warned that President Trump’s tariffs will soon impact prices.

And while the world’s largest retailer is poised to navigate these challenging economic times, one segment of the economy is not: small businesses. 

On Walmart’s investor call last week, C. Douglas McMillon, president, CEO and director of the retailer, said the company’s short- and longer-term opportunities are clear. “The immediate challenge is obviously navigating the impact of tariffs here in the U.S.,” he explained. “Our mindset and approach haven’t changed since our investor conference last month in Dallas. I want to thank President Trump and Secretary Bessent for the progress made recently.”

McMillon went on to say that he is hopeful that negotiations lead “to a longer-term agreement between the U.S. and China that would result in even lower tariffs. We will do our best to keep our prices as low as possible. But 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.”

That means higher prices. And if Walmart struggles with absorbing pricing pressure from tariffs, what about the mom-and-pop retailer down the block?

In a report by Nerdwallet, the authors noted several ways tariffs can negatively impact small businesses, which include increased cost of goods, higher prices for consumers, supply chain disruptions and trade issues for U.S. exporters.

There are other ways too. The higher prices needed to cover the tariffs can force shoppers to turn elsewhere. Slowed sales also make it challenging for businesses to make investments — including hiring. Moreover, smaller businesses work on much smaller profit margins and have fewer resources to try and mitigate the negative impact of tariffs.

While Walmart is a behemoth, the company is going back to basics when it comes to conducting business in the current landscape.

On the earnings call, the CEO took listeners through a quick course in retailing 101 that included managing inventory. “In this situation [with tariffs], it’s even more important and even more challenging,” McMillon said. “It’s helpful that we’re entering the second quarter with well-managed inventory. It’s helpful that we’re crossing the threshold of profitability with e-commerce globally, and that we have these newer, higher-margin businesses growing like membership and advertising.”

McMillon said it is also helpful that Walmart sells “a broad assortment that includes food, consumables and general merchandise. It’s helpful that so much of our assortment is replenishable, which means we can flow it. We don’t have to make a one-time call on a quantity. Instead, we can adjust the forecast and partner with our suppliers to adjust quantities over time as we navigate tariff impacts on costs.”

So, the takeaway for small businesses is to manage your inventory and work with suppliers, who want to move goods just like you. And having a broad and diverse assortment can also help.

Tips and Strategies to Mitigate the Impact of Tariffs on Small Businesses

As we’ve seen, tariffs can present significant challenges for small businesses, affecting supply chains, operational costs, and ultimately, customer relationships. However, small business owners can take proactive steps to minimize the potential disruption tariffs may have on their operations. Below are some actionable strategies from Nerdwallet, Cerity Partners, and myPocketCFO to help small businesses mitigate the financial strain caused by tariffs.

Talk To Your Customers: If tariffs force you to raise prices due to increased costs, transparency with your customers is key. Take the time to explain the reasons behind the price changes and how global market conditions have impacted your business. Use this as an opportunity to emphasize the strengths of your products and services.

Streamline Operations: Boosting efficiency across your business operations can help counteract the financial impact of tariffs. Conduct a thorough review of your processes and operations to identify areas where costs can be reduced or operations simplified.

Rethink Your Supply Chain: One effective way to offset tariff-related costs is by reassessing your supply chain. Explore alternate sources for goods or materials, particularly suppliers based in countries unaffected by tariffs. Alternatively, consider partnering with local providers to reduce reliance on international imports.

Seek Help: Professional guidance can provide invaluable support during challenging times. Financial advisors or accountants can help you develop a tailored plan to manage the economic effects of tariffs. Also, check to see if your local community has a Small Business Development Center (SBDC), which can connect you with experienced business mentors. You can use this tool from the U.S. Small Business Administration to find an SBDC near you.

As we can see, the ripple effect of tariffs across the retail sector demonstrates the stark contrast between Walmart’s adaptability and the vulnerability of small businesses. While big-box retailers can lean on diversified product assortments, strong supplier relationships, and operational efficiency, small businesses often lack the resources to withstand similar shocks.

To mitigate the impact, small business owners must take proactive steps like engaging with customers transparently, streamlining processes, rethinking supply chains and seeking outside expertise. Tariffs may pose complex challenges, but strategic actions can help small businesses weather the storm and emerge stronger in the long run.

And there’s no time to waste.