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, stubborn inflation, and weak hiring have shaken consumer confidence in the U.S. economy. A December poll revealed that the vast majority of U.S. adults have noticed higher prices for groceries, electricity, and holiday gifts. The economic outlook is grim, with a Gallup index summarizing Americans' assessments of current economic conditions falling to a 17-month low in November. Consumers are also indicating less enthusiasm for spending on holiday gifts, with their estimated gift budgets decreasing by $229 between October and November. However, the worst-case impact on consumer prices that many economists foresaw from the Trump administration's tariff policies hasn't materialized. Some products have been affected more than others, and here's a look at what has happened with supplies and prices in popular gifting categories.
Game and toys were particularly susceptible to tariff-related price increases since the majority of the ones sold in the U.S. are made in China. The tariff rate imposed on Chinese goods became a rollercoaster, starting at 10%, peaking at 145%, and ending up at 47%. The uncertainty made it hard for toy shops to decide what to order for the holidays. Dean Smith, who co-owns independent toy stores, said the manufacturers in China that he buys toys from did not pass on their tariff costs all at once but he has seen their prices inch higher with every reorder. Wholesale prices for 80% of his inventory went up anywhere from 5% to 20%. Some shoppers who don't buy toys regularly might be surprised by price increases.
Consumer electronics are mostly made in China and other Asian countries. In 2023, China accounted for 78% of U.S. smartphone imports, and 79% of laptop and tablet imports. Best Buy raised prices due to tariffs, but CEO Corie Barry said the consumer electronics chain made sure to stock computers, phones, and other products at different price levels, a decision she credited with helping Best Buy attract more lower-income shoppers. Game consoles are always a popular holiday item, and console makers made news earlier this year when they announced price increases. Sony raised the price of the PlayStation 5 by $50 to $550 in August, following Microsoft and Nintendo raising prices for their game consoles.
Jewelry shoppers will likely see higher prices, but that has more to do with the soaring price of gold than tariffs so far, according to David Bonaparte, president & CEO of trade group Jewelers of America. The varying tax rates Trump set for countries that import American goods with a total value less than their exports to the U.S. affected jewelry in various ways. Watches from Switzerland, for example, were subject to a 39% tariff from July 31 until the country struck a deal with the Trump administration last month to lower the import tax rate on its products to 15%. 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 on Aug. 27. Higher prices for jewelry made with diamonds shipped from India will likely start to be felt in 2026.
Holiday decorations are yet another category that mostly comes from overseas, particularly China. Jeremy Rice co-owns House, a home-décor shop in Lexington, Kentucky, that specializes in artificial flowers, wreaths, and table decorations. He said the tariffs slowed down production of much of his fall stock and seasonal merchandise like ribbon. Some larger and more expensive items he didn't order at all because they would have been too expensive to retail. Rice raised prices on the products he did get. The popular red berry stems that House long 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 technology consulting company Coresight Research, recommends checking out secondhand stores and discount retailers like T.J. Maxx, Marshall's, and HomeGoods. The off-price chains buy much of their inventory from leftover stock that would have entered the U.S. before new tariffs kicked in. Joe Adamski, senior director at procurement services company ProcureAbility, said books, food, and beverages are some of the domestically produced goods that make good gifts.
