“We will do our best to keep our prices as low as possible, but given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins,” Walmart CEO Doug McMillon said Thursday on an earnings call. “The higher tariffs will result in higher prices.”

The Arkansas-based company reported strong quarterly sales and said it expects further growth of between 3.5% and 4.5% in the second quarter. However, it may soon feel the brunt of increased prices for Chinese products in particular.

The United States and China reached a de-escalation deal last week that still left tariffs of 30% on imports from the country. The White House also lowered the tax on low-value parcels from China, known as the de minimis tariff, from 120% to 54%, but that is still much higher than the 0% duty that was in place on packages valued under $800 until Trump returned to office.

Trump said on the campaign trail that “tariff” was his favorite word in the dictionary, and he has moved aggressively to implement them now that he’s in office. The goal is to have more items made in the U.S. and to boost manufacturing employment, which the White House pointed to in a statement.

“Real prosperity is American workers being able to support their families and communities because they have good jobs that pay well and provide dignity,” spokesman Kush Desai said. “This is what the Trump administration’s America First agenda of tariffs, deregulation, tax cuts, and domestic energy is focused on unleashing — not cheap Chinese toys.”

Trump has suggested tariffs will cause Americans to buy fewer dolls for Christmas for their children, and they may cost more. But he claims that short-term pain to balance out trade deficits will pay off in the long run in the form of more U.S.-based manufacturing.

Meanwhile, inflation has remained low since Trump took office, bucking for now fears that tariffs would cause prices to skyrocket. Inflation fell by a tenth of a percentage point to 2.3% for the year ending in April, according to the Bureau of Labor Statistics, slightly below the expected rate of 2.4%.

Last week, the Federal Reserve found that Trump’s tariffs have led to a 0.3% increase in prices. 

Still, Trump’s opponents pointed to the Walmart news as evidence that middle- and working-class consumers will feel the brunt of his trade war and said an economic downturn is still in the picture.

“Donald Trump and his administration are showing their true colors, letting costs skyrocket while they cash in for themselves,” the Democratic National Committee wrote in a newsletter blast. “While prices continue to rise and a recession looms, Trump and his Cabinet of cronies have no solutions.”

Trump met with McMillon, the Walmart CEO, just last month to discuss the impact of tariffs along with the leaders of Target and Home Depot.

But in an interview, Walmart Chief Financial Officer John David Rainey said consumers will likely see higher prices at the end of May. Walmart operates more than 10,750 stores and clubs in 19 countries, while employing 2.1 million people worldwide, according to the company.

“I’m concerned that consumers are going to start seeing higher prices,” Rainey told CNBC. “You’ll begin to see that, likely towards the tail end of this month, and then certainly much more in June.”

About two-thirds of Walmart’s products are sourced domestically, including most of the grocery items that constitute a majority of the company’s revenues. However, Walmart is heavily dependent on China to supply toys and electronics.

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This isn’t the Trump administration’s first go-round with a retail business concerned about tariffs. The White House slammed Amazon over reports it would display the impact of tariffs on its website, after which Amazon backed off of the idea.

When toy maker Mattel said it would be taking “pricing action” in response to tariffs, Trump threatened to place a 100% tariff on its products made outside the U.S. so that Mattel “won’t sell one toy in the United States.”

For Walmart, the world’s largest retail company based in Bentonville, Arkansas, the dispute could also place pressure on its elected federal officials, who are staying tight-lipped at the moment.

Sen. Tom Cotton (R-AR) declined to comment when approached Thursday by the Washington Examiner, and Sen. John Boozman (R-AR) said he was not familiar with the development. A spokesperson for Rep. Steve Womack (R-AR), who represents the district where Walmart is headquartered, declined to comment as well.

David Sivak and Ramsey Touchberry contributed to this story