The holiday shopping season is in full swing, but the impact of US tariffs on prices and purchases is causing a shift in consumer behavior. While some stores are struggling to turn browsers into buyers, others are focusing on more profitable items. The uncertainty surrounding tariffs has led to cautious spending, with consumers cutting back on holiday gifts and opting for more affordable options. Despite the challenges, some businesses are finding ways to adapt and thrive in this environment.
The Ah Louis Store in San Luis Obispo, California, is a prime example of a business that has had to work harder to make a profit this holiday season. The store's co-owner, Emily Butler, and her sister-business partner have had to focus on more profitable items like nutcrackers and gift baskets. They've also noticed customers cutting back on their spending, opting for cheaper gift baskets or buying fewer ornaments.
The tariffs imposed by President Donald Trump on imported goods have had a significant impact on the cost of decorations and stocking stuffers. Many of these items are made overseas and have either not arrived or become more expensive. The sisters have had to work harder to turn browsers into buyers and make a profit.
The impact of tariffs on consumer prices has been uneven, with some products affected more than others. Game and toys, for example, have been particularly susceptible to tariff-related price increases since most of them are made in China. The tariff rate imposed by the Trump administration on Chinese goods has been a rollercoaster, starting at 10%, peaking at 145%, and ending up at 47%.
The uncertainty surrounding tariffs has made it difficult for toy shops to decide what to order for the holidays. Dean Smith, who co-owns independent toy stores in New Jersey and Pennsylvania, has seen the prices of toys inch higher with every reorder. He estimates that wholesale prices for 80% of his inventory have gone up anywhere from 5% to 20%.
Consumer electronics are also mostly made in China and other Asian countries. Best Buy raised prices due to tariffs, but the company made sure to stock computers, phones, and other products at different price levels to attract more lower-income shoppers. Sony, Microsoft, and Nintendo all raised the prices of their game consoles this year.
Jewelry shoppers will likely see higher prices, but that has more to do with the soaring price of gold than tariffs. The varying tax rates set by Trump for countries that import American goods with a total value less than their exports to the U.S. have affected jewelry in various ways. India, which refines many of the diamonds sold in the U.S., rushed in shipments of the gemstones before a 50% tariff on the country's products took effect.
Holiday decorations are another category that mostly comes from overseas, particularly China. The tariffs have slowed down the production of much of the fall stock and seasonal merchandise. Some larger and more expensive items were not ordered at all because they would have been too expensive to retail. Prices on the products that were obtained have been raised, and the popular red berry stems that House, a home-décor shop in Kentucky, has carried increased from $8.95 last year to $10.95 due to higher import costs.
For those looking to avoid tariff-related price increases, John Harmon, managing director of technology research at Coresight Research, recommends checking out secondhand stores and discount retailers like T.J. Maxx, Marshall's, and HomeGoods. Books, food, and beverages are some of the domestically produced goods that make good gifts.
