WASHINGTON (AP) — Treasury Secretary Scott Bessent on Sunday played down inflation risks from the Trump administration’s tariffs, saying that he spoke to the head of Walmart and the retailer’s warnings of price increases for consumers were simply a “worst case scenario.”
As doubts persist about President Donald Trump’s economic leadership, Bessent pushed back against inflation concerns, praised the uncertainty caused by Trump as a negotiating tactic for trade talks and dismissed the downgrade Friday of U.S. government debt by Moody’s Ratings.
Bessent said he spoke on Saturday with Walmart CEO Doug McMillon, stressing in two news show interviews that what he thought really mattered for Walmart customers was the decline in gasoline prices. Gas is averaging roughly $3.18 a gallon, down from a year ago but also higher over the past week, according to AAA.
“Walmart will be absorbing some of the tariffs, some may get passed on to consumers,” Bessent said. “Overall, I would expect inflation to remain in line. But I don’t blame consumers for being skittish after what happened to them for years under Biden,” a reference to inflation hitting a four-decade high in June 2022 under then President Joe Biden as the recovery from the pandemic, government spending and the Russian invasion of Ukraine pushed up costs.
Walmart did not immediately respond to a request for comment on Bessent’s description of his conversation with McMillon.
Trump on Saturday that Walmart should absorb the additional costs created by his tariffs.
“Walmart made BILLIONS OF DOLLARS last year, far more than expected. Between Walmart and China they should, as is said, “EAT THE TARIFFS,” and not charge valued customers ANYTHING. I’ll be watching, and so will your customers!!!” he posted on his Truth Social site.
Bessent said Walmart on its earnings call on Thursday had been obligated under federal regulations “to give the worst-case scenario so that they’re not sued,” suggesting that the price increases would not be severe in his view.
But Walmart executives said last week that higher prices began to appear on their shelves in late April and accelerated this month.
“We’re wired to keep prices low, but there’s a limit to what we can bear, or any retailer for that matter,” Chief Financial Officer John David Rainey told The Associated Press on Thursday.
Bessent maintained that the ratings downgrade was a “lagging indicator” as the financial markets had already priced in the costs of a total federal debt of roughly $36 trillion. Still, the tax plan being pushed by Trump would add more roughly $3.3 trillion to deficits over the next decade, including a $600 billion increase in 2027 alone, according to the Committee for a Responsible Federal Budget.