If you’ve ever walked into a store that looks like a winter dream, you know the impact of tariffs isn’t just about numbers on a page. The Ah Louis Store in San Luis Obispo, California, transforms into a festive spectacle every holiday season, with green garlands, towering nutcrackers, baubles, and bows adorning the historic downtown building. Inside, more than 500 types of ornaments and a range of holiday gift baskets await shoppers. Co-owner Emily Butler describes the shop as a magical destination designed to spread holiday joy, no matter whether customers buy anything or simply linger.
This year, however, turning window shoppers into paying customers required extra effort. A large share of their decorations and stocking stuffers are imported, and they were affected by unusually steep tariffs on imported goods implemented by the Trump administration. In response, the sisters shifted their focus toward items with higher profit margins, such as nutcrackers and gift baskets. They also observed customers tightening their belts: many chose a $100 gift basket instead of a $150 version or bought fewer ornaments. Butler notes that spending feels noticeably more cautious this year.
Beyond tariffs, inflation and weak job growth have shaken consumer confidence in the U.S. economy. A December poll from The Associated Press-NORC Center for Public Affairs Research shows that most U.S. adults report higher prices for groceries, electricity, and holiday gifts in recent months. In November, a Gallup index measuring views on current economic conditions dropped to a 17-month low, and respondents trimmed their holiday gift budgets—the average planned expenditure fell by $229 from October to November, the largest such dip Gallup has recorded for this stage of the season. The government shutdown during that period may have tempered holiday ambitions as well.
Despite fears about tariffs driving prices higher, the worst-case scenarios have not fully materialized. Price changes have varied by category. Toys and games, which largely come from China, have seen noticeable tariff-driven price shifts. The Trump tariffs have swung dramatically—from an extra 10% to a peak of 145%, then down to 47%—creating significant uncertainty for retailers deciding what to stock for the holidays. JaZams co-owner Dean Smith notes that Chinese manufacturers did not raise costs all at once, but prices climbed with each subsequent order, boosting wholesale prices for roughly 80% of his inventory by about 5% to 20%. A doll that sold for $20–$25 last year might now go for $30–$35. For shoppers on tighter budgets, that extra cost can be a substantial hurdle.
Electronics, another major holiday draw, are largely produced in Asia. In 2023, China supplied around 78% of U.S. smartphone imports and 79% of laptop and tablet imports, according to the Consumer Technology Association. Retailers have responded in different ways: Best Buy, for example, raised some prices due to tariffs but also diversified its pricing to reach lower-income customers by stocking products at multiple price points. Sony, Microsoft, and Nintendo have raised console prices in recent months as well.
Even jewelry, often sensitive to metal prices, is being influenced by factors beyond tariffs. The surge in gold prices has driven costs up, and tariff effects have varied because different countries have different tariff structures when exporting to the U.S. For instance, watches from Switzerland faced a temporary 39% tariff before a recent deal reduced it to 15%. India, a key source of many diamonds refined for U.S. markets, faced a 50% tariff on diamond shipments starting August 27, with price increases expected to ripple into 2026 if tariffs persist.
Holiday decorations, which many shops source from overseas—particularly China—also reflect tariff-driven cost pressures. Jeremy Rice, who co-owns House in Lexington, Kentucky, reports that tariff volatility slowed production of fall stock and certain seasonal items like ribbon; some larger or pricier pieces were simply not ordered. When House did stock items, prices rose—red berry stems jumped from $8.95 to $10.95—creating a sense of hesitation in sales as retailers and suppliers passed higher costs along to customers.
For shoppers looking to dodge tariff-induced price hikes, industry experts offer alternative pathways. Technology research expert John Harmon suggests exploring secondhand stores and off-price retailers such as TJ Maxx, Marshall’s, and HomeGoods, which often acquire leftover stock that entered the U.S. before new tariffs took effect. Additionally, some domestically produced goods—like books, food, and beverages—continue to offer good gift options.
Overall, the holiday shopping landscape is more complicated and uneven than many expected. If tariffs stay in place, prices may continue to drift upward in some categories, even as others remain relatively stable. The coming months will reveal how consumer behavior adapts as shoppers weigh cautious spending against the perennial impulse to give meaningful gifts.
