Walmart drops operating income forecast amid trade war uncertainty

In the United States, major corporations like Walmart and Delta Air Lines are facing challenges due to President Donald Trump's trade policies. Recently, Walmart announced that it has withdrawn its guidance for operating income growth in the first quarter of 2025, attributing this decision to heightened sales volatility, a less favorable category mix, and increased casualty claims. This uncertainty in consumer sentiment is a reflection of the ongoing trade tensions, particularly concerning significant tariff implementations on imports, which have been causing fluctuations in consumer behavior and spending patterns. Walmart, primarily dependent on U.S.-made products for about two-thirds of its spending, sources the remaining third from international markets, especially China and Mexico. The impact of tariffs poses inflationary threats that could ultimately affect consumers' purchasing power. In an effort to maintain flexibility amidst the turmoil, Walmart executives expressed belief in their company's ability to navigate this environment, recalling past crises that the brand has weathered, such as the aftermath of September 11 and the global financial crisis. Delta Air Lines also expressed concerns during its latest earnings report, indicating that broader economic uncertainty has stalled growth. CEO Ed Bastian highlighted the need to protect margins and cash flow, resulting in a reduction of planned capacity growth for the second half of 2025. With projected profitability dropping to approximately $1.5 to $2 billion for the June quarter, Bastian refrained from providing an updated full-year outlook, citing the lack of clarity in the economic landscape. Both Walmart and Delta are major indicators of consumer confidence, shedding light on the health of the U.S. economy as they navigate the challenges brought forth by trade disputes. As these corporations adapt their strategies to address tariff impacts, their responses can provide insights into future consumer sentiments and purchasing behaviors, as well as the overarching economic climate shaped by ongoing trade policies.