Holiday Retailers Face 20% Price Hikes, Supply Uncertainty Due to Tariffs

As the summer season progresses in the United States, retail executives are grappling with the complexities of the upcoming holiday season. With less than 22 weeks until Christmas, businesses that produce and sell consumer goods are typically finalizing their holiday orders and prices. However, President Donald Trump’s fluctuating trade policies have introduced significant uncertainty into these end-of-year plans. These policies, aimed at revitalizing the nation’s manufacturing sector and reducing the U.S. trade deficit, have made it challenging for companies to predict the costs and availability of imported goods.

Balsam Hill, an online retailer of artificial trees and decorations, has had to adjust its holiday catalogs due to the changing tariff rates. The company’s CEO, Mac Harman, noted that the uncertainty has forced them to constantly re-evaluate their orders, import locations, and delivery timelines. This has made it difficult to determine which products will be included in their catalogs.

The ongoing confusion over which foreign products may become more expensive to import has cast a shadow over the holiday shopping season. U.S. retailers typically begin planning for the winter holidays in January and finalize most of their orders by the end of June. The fluctuating tariffs have already impacted their calculations, leading to potential shortages of specific gift items during November and December. Some retailers have scaled back their holiday lines to avoid hefty tax bills or expensive imports going unsold. Consumers can expect higher prices, though the exact increase depends on whether the latest round of tariffs takes effect next month.

The toy industry, which sources nearly 80% of its products from China, has been particularly affected. The industry usually ramps up production in April, but this year the process was delayed until late May due to a 145% tariff on Chinese goods. Although the tariff rate has since dropped, it continues to influence the holiday period. Small- and medium-sized U.S. toy companies have seen a significant decrease in manufacturing activity compared to last year. The late start to factory work in China means holiday toys are only now arriving at U.S. warehouses, leaving retailers uncertain about whether they will be able to replenish supplies of popular items.

Dean Smith, co-owner of independent toy stores JaZams in Princeton, New Jersey, and Lahaska, Pennsylvania, recently spent an hour and a half discussing pricing scenarios with a Canadian distributor due to a 20% increase in wholesale costs for some products. Smith had to eliminate half of the products he normally buys to maintain reasonable margins without raising prices beyond what consumers would accept. He ordered a lower-cost Crazy Forts building set but left out the kids’ edition of the Anomia card game due to potential price sensitivity.

Hilary Key, owner of The Toy Chest in Nashville, Indiana, usually gets new games and toys in early to test which ones to stock up on for the winter holidays. This year, she abandoned her product testing due to fears of delayed orders incurring high import taxes. Vendors of toys made in China and elsewhere have bombarded her with price increase notices, with some products seeing a 20% increase. Key worries that her store may not have as compelling a product assortment as in previous years, potentially affecting her ability to meet the needs of customers with specific developmental ages or special needs.

The retail industry may need to continue navigating the White House’s latest tariff ultimatums and temporary reprieves. Last week, the president reset the rates on imports from major trading partners but delayed their implementation until Aug. 1. This brief pause should extend the window for importers to bring in seasonal merchandise at the current baseline tariff of 10%. The Port of Los Angeles had its busiest June in its 117-year history as companies raced to secure holiday shipments, and July imports look strong so far. The pace of port activity reflects a “tariff whipsaw effect,” with imports slowing when tariffs kick in and rebounding when they’re paused. Consumers may face lower inventory levels, fewer selections, and higher prices as the holidays approach.

Smith and his partner, Joanne Farrugia, started placing holiday orders two months earlier than usual for essential items and doubled their warehouse space to store the stockpile. However, they are wary of having to restock at a higher cost. Customers have been snapping up items likely to be popular during the holidays, such as Jellycat plush toys and large stuffed unicorns and dogs. Smith and Farrugia are trying to balance consumer friendliness with a product portfolio that meets the needs of their various customers, a challenge that grows more difficult by the day.

Balsam Brands’ Harman has had to accept that they will not have as robust a selection of ornaments and frosted trees to sell as in previous years. Soon, it will be too late to import meaningful additions to their product range. Despite the challenges, Harman remains committed to creating joy for their customers, even if it means not having all the items consumers want this year.