Walmart said it expects to use recently returned tariff payments to help reduce prices as customers grow more cautious about rising fuel costs. Company executives told investors the refunds, returned by the federal government after most of last year’s higher customs fees were struck down by the Supreme Court, will likely be funneled into price relief for shoppers.
On an earnings call, Chief Financial Officer John David Rainey said a new pattern at Walmart gas stations — customers filling up with fewer than ten gallons for the first time since 2022 — signals financial stress for some shoppers. He said higher-income customers continue to spend with confidence, while lower-income shoppers are becoming more budget-conscious and, in some cases, experiencing financial strain.
Rainey argued that investing any returned tariff dollars in lower prices is the best use of capital right now. He noted that Walmart stores and fuel stations have been attracting more bargain-seeking shoppers, and that U.S. sales at the retailer rose 4.1% from February through April.
Other big retailers reported similar trends this earnings season. Home Depot, Target and Lowe’s also saw sales growth in the latest quarter, and executives at those companies said slightly larger tax refunds for consumers this year have helped offset some budget pressure.
Federal data show retail spending, both in stores and online, grew 5.2% in April year-over-year — a gain that outpaced inflation. But spending at gas stations jumped far more, rising roughly 21%, driven by higher pump prices.
Walmart executives warned that sustained high fuel costs will eventually push up the prices consumers pay in stores, since transportation and shipping expenses affect merchandise costs. They reported a noticeable hit to profit from higher fuel expenses in the quarter. Home Depot also said it might use tariff refunds to help offset rising fuel and freight costs.
Broader geopolitical tensions are adding to energy cost pressure. The U.S. military confrontation with Iran has disrupted tanker traffic through the Strait of Hormuz, a key route for fuel and fertilizer shipments, and contributed to higher energy prices. U.S. inflation hit its highest level in three years in April, with energy being a major driver.
Average retail gasoline prices have climbed significantly over the past year; one widely cited gauge showed the average price for regular unleaded at about $4.56 per gallon on Thursday, roughly $1.38 higher than a year earlier.
For now, large retailers have been absorbing some of the added transportation and input costs rather than immediately passing them fully to customers. Walmart’s announcement that it will channel tariff refunds into price investments signals a strategic push to keep prices competitive for shoppers feeling the strain from higher fuel and living costs.