Walmart could suffer a massive $2 billion loss as Trump admin halts SNAP benefits

The unprecedented halt of SNAP benefits and tarriffs will hurt the supermarket chain.

PUBLISHED 5 DAYS AGO

Representational images of a Walmart store and President Donald Trump (Cover image source: Getty Images | Photos by Kevin Carter and Andrew Harnik)

As one of the biggest retail chains in the world, Walmart has weathered many storms, including massive recalls and questions about the quality of its products. But recent reports suggest that it might be hit by a massive $2 billion loss in November due to the Trump administration's policies. Although the company saw a 4.6% year-over-year increase in comparable sales and 1% increase in footfall at its stores, the US government may end up costing the company a whole lot of money.

A worker collects shopping carts from the parking lot of a Walmart store on May 18, 2023 in Chicago, Illinois. Walmart, the world's largest retailer, today reported first-quarter same-store sales growth that beat expectations and the company raised its full-year forecast.|Getty Images|Photo by Scott Olson — A worker collects shopping carts from the parking lot of a Walmart store (Image source: Getty Images|Photo by Scott Olson)

The reason behind this is the halting of SNAP benefits in November. For those unfamiliar with the term, SNAP stands for Supplemental Nutrition Assistance Program. It is a federal program that allows low-income families and individuals to afford healthy food. Nearly 40 million Americans are benefiting from the program. According to a report in TheStreet, Walmart is the top retailer that attracted SNAP beneficiaries in the 12-month period ending September 30.

Turns out that more than 94% of the people who benefit from SNAP do their shopping at its stores. Now, with SNAP facing an unprecedented halt starting November 1, these customers, who are price-sensitive, will look for cheaper alternatives. Even if they opt to do their grocery shopping at Walmart, their purchasing power would drastically come down. That is not an ideal scenario for Walmart or the customers in question.

Representative Cover Image Source: Getty Images | Sundry Photography

“Retailers are already contending with lower-income consumers trading down and being more selective in their spending,” Tematica Chief Investment Officer Chris Versace said to the publication, before adding, “A potential pause in SNAP benefits next month will increase the pinch those consumers are feeling, likely leading to another leg down in their spending. Should that pause come to pass, odds are it will be a reason to question some of the more aggressive holiday shopping forecasts.”

Cover Image Source: Getty Images | Photo By Justin Sullivan

Turns out that the company will lose $2 billion due to this debacle. The government spends $100 billion per year, or a little more than $8 billion per month, on the program. If the program is not started again, Walmart could even have a situation where they will lose that kind of money every month. What has made this situation even worse are the tariffs currently put in place by the authorities.

Due to these tariffs, the American shopper has to pay a lot more than they used to for various products, including groceries. To combat this, Walmart has been forced to introduce 7,400 price rollbacks during the quarter, 2,000 more than it did during the same period last year. However, this is not a sustainable model for any business. “We’re keeping our prices as low as we can for as long as we can,” Walmart CEO Doug McMillon said during an earnings call.