While it’s the trials and tribulations of Big-Tech that usually has everyone at the edge of their seats, the most telling — and potentially dramatic — signals for the U.S. economy will come from two seemingly staid players:
Walmart and Target.
Their upcoming Q2 2025 earnings are the clearest test for that critical question:
Are Trump’s tariffs starting to bite?
Mark your calendars:
Target reports on Wednesday, August 20, 2025 (pre-market)
Walmart reports on Thursday, August 21, 2025 (pre-market)
Here is why their reports are vital:
The “Who Pays?” Mystery will unravel:
The prevailing assumption that retail giants could force suppliers to fully absorb tariffs is cracking. Walmart has already faced significant blowback from Chinese manufacturers after pleading with them to eat the costs. This puts them in an impossible bind: absorb the hit to margins or pass it on to consumers.
Target’s vulnerability:
Target imports roughly 30% of its goods from China, a vastly higher exposure than many peers. All eyes will be on its Cost of Goods Sold (COGS) line. A significant spike will be a direct signal that tariffs are piercing through corporate defences and hitting the income statement.
The Consumer Canary in the Coal Mine:
Any shift in management commentary on consumer spending will be seismic. Are low-income shoppers trading down even more aggressively? Is the middle class starting to balk at rising shelf prices? These companies have their finger on the pulse of the American consumer like no one else.
Earnings will confirm the hard data:
The latest Producer Price Index (PPI), released on August 14th, showed a 0.9% spike in July — this is the largest monthly increase since June 2022. That spike provides unambiguous evidence that the higher PPI, when viewed alongside a softer CPI, reflects the situation on ground accurately — that businesses have been ‘eating the tariffs’ (see tweet) — at least until the close of July.
Walmart and Target’s earnings will show us exactly if this wholesale pressure is already being trickled into the Main Street retail level (my guess is this has already started to happen during the current quarter, especially in August; next quarter is holiday season, and it could be testy for either of these corporates to attempt the pass-through then)
Rest assured, these two earnings reports are going to be closely watched by both the Trump administration and the Fed.
So, as this week progresses — to use a term from a web series I am currently watching on Netflix with my kids — we will know for certain if that bogeyman of the year ‘TARIFFS’ has finally emerged from his secret lair, in the upside-down world, into the real-world, where consumers still remain oblivious.
To the full effects of tariffs.
