Walmart is signaling it will use tariff refunds to reduce prices, as its executives describe signs that shoppers are adjusting to higher fuel costs. On Thursday, Walmart executives said the company expects to direct those refunds toward store pricing while looking at customer behavior that points to mounting strain from gas spending, according to the company’s comments captured during earnings-related communications.
Chief Financial Officer John David Rainey told investors on an earnings call that visits to Walmart gas stations had recently shifted, with fewer customers filling up with more than roughly 10 gallons. “That’s an indication of stress,” Rainey said. He added that customer spending patterns differed by income level, saying the “high-income customer” was buying with more confidence while the “lower-income consumer” was more budget-conscious and perhaps dealing with financial distress.
The tariff refunds at the center of Walmart’s plan reflect a broader shift in the U.S. tariff landscape after the Supreme Court struck down most of the tariff payments imposed by President Trump last year. The U.S. government began refunding tariffs payments to importers after that decision, and Walmart is now describing itself as the largest retailer suggesting it will treat the refunds as a potential lever for price reductions.
Rainey framed the decision as an investment in customers, saying the “single best return that we can have on a dollar of capital right now is to investment in the customer, invest in price.” He also pointed to what Walmart sees as increased shopping at its stores and gas stations for deals, while also warning that high gas costs could ultimately work their way into prices shoppers see inside stores.
Retail demand has remained mixed as consumers face energy-driven price pressure. Walmart reported U.S. sales grew 4.1% from February through April. In addition to that report, the company’s executives noted that tax refunds slightly larger this year appear to be offsetting some budget pain so far, a point also echoed by rival retailers that reported earnings this week.
Home Depot, Target and Lowe’s all reported sales growth in their latest quarters, and the broader picture of retail spending has been supported by federal data showing retail and online spending rising 5.2% year over year in April, surpassing inflation—indicating that consumers may have bought more despite higher prices. At the same time, spending at gas stations surged 21% in the same period, driven in part by higher gasoline costs.
The higher fuel costs are tied to shipping constraints and elevated energy prices, with NPR reporting that the U.S. war with Iran has snarled tanker passage through the Strait of Hormuz, a key corridor for shipments of fuel and fertilizer. The ripple effects have also shown up in inflation: NPR reported U.S. inflation jumped in April to its highest level in three years, with energy costs a major driver. The average U.S. price of regular gas on Thursday was $4.56 per gallon, AAA reported, up $1.38 from a year earlier.
So far, large retailers have been absorbing transportation and shipping expenses, but Walmart said its income has taken a notable hit from higher fuel expenses. Other major retailers also signaled they could draw on tariff refunds in different ways to counter mounting fuel costs, with Home Depot executives telling investors earlier this week that the company might use its own tariff refunds to offset rising expenses.