Tariffs Disrupt Holiday Shopping: Higher Prices, Fewer Choices, and Thinner Discounts Expected Across US Retail Sector

Wells Fargo's "2025 Supply Chain Report" warns that the impact of Trump's tariffs on imported goods may lead to higher prices, fewer choices, and thinner discounts for holiday shoppers. Retailers are adjusting strategies by increasing inventory, reducing orders, and streamlining product offerings. The tariffs are expected to become apparent this fall, with potential price increases for tariff-sensitive goods like apparel and furniture. Consumers may still seek discounts, but they may be more selective in their choices.

Wells Fargo's "2025 Supply Chain Report" provides a detailed outlook on the potential impact of President Trump's tariffs on imported goods on the upcoming holiday shopping season. The report, released on Wednesday, projects significant shifts in shopping patterns, prices, and promotional strategies due to the tariffs.

The report highlights that retailers have been adjusting their strategies since the announcement of tariffs in April. Some retailers have increased their inventory to offset potential tariff costs, while others have reduced orders, focusing on their best-selling items. This approach is aimed at managing the increased costs associated with tariffs.

Adam Davis, managing director for Wells Fargo Retail Finance and one of the report's authors, noted that retailers are adopting a methodical approach to pricing. "You can't just mark everything up 5-10%, you have to be very methodical on certain items and how you're approaching it," Davis said. Retailers may also trim promotions rather than hike list prices, according to Jeremy Jansen, head of global originations for Wells Fargo Supply Chain Finance. Expect fewer big-ticket rebates like appliances, Jansen suggested.

The report also indicates that retailers are cutting units and narrowing their product assortments to control costs. This strategy, referred to as "inventory rationalization," is expected to lead to fewer choices for consumers. Some tariff-sensitive goods, such as apparel, furniture, and holiday décor, may be priced higher or stocked in smaller assortments this fall.

Retailers are likely to roll out promotions as early as September and October to spread out demand and prevent stock shortages in December. While consumers are still expected to chase discounts, the deals they go after may be more selective than in previous years.

The effects of the tariffs are expected to become apparent this fall, impacting consumers and retailers alike. The report underscores the need for retailers to be strategic in their approach to pricing and inventory management in the face of increased costs.

References:
[1] https://www.axios.com/2025/08/27/trump-tariffs-holiday-shopping-wells-fargo-report
[2] https://www.benzinga.com/markets/macro-economic-events/25/08/47383674/holiday-shoppers-to-brace-for-higher-prices-fewer-choices-and-thinner-discounts-as-trumps-tariffs-ripple-across-us-retail-sector-report