NEW YORK — The Ah Louis store in San Luis Obispo, California, transforms into a winter wonderland every holiday season.
Green garlands, giant nutcrackers, balls and bows are placed in early November in the historic downtown building that houses the gift shop. Inside, customers can choose from more than 500 different types of decorations and a variety of holiday gift baskets.
“We really made it a magical place. Whether you come in or not, we want to make sure we’re spreading that Christmas cheer” Emily Butler, co-owner of the store.
But Butler says she and her twin sister, her business partner, had to work harder this year to turn curious people into buyers and turn a profit. Many of the ornaments and small gifts they sell are made overseas and either didn’t arrive or became more expensive when President Donald Trump imposed unusually high taxes on imported goods, she said.
In response, the sisters focused their selection on more cost-effective items like nutcrackers and gift baskets. They’ve also noticed that customers are reducing their purchases, choosing a $100 gift basket instead of the $150 version, or purchasing one ornament instead of several, Butler said.
“We are definitely seeing more prudent spending this year,” he said.
The combination of unpredictable tariffs, persistent inflation and weak hiring have shaken consumer confidence in the U.S. economy. The vast majority of adults in the United States say they have noticed higher-than-usual prices for groceries, electricity and holiday gifts in recent months, according to a December survey by The Associated Press-NORC Center for Public Affairs Research.
A Gallup index summarizing Americans’ assessments of current economic conditions fell to a 17-month low in November. Consumers also showed less enthusiasm for spending money on holiday gifts: Their estimated gift budgets dropped $229 between October and November, the biggest drop Gallup has recorded at that point in the holiday shopping season. The survey was conducted in November, partially during the government shutdown, which could have tempered spending plans.
However, the impact on consumer prices that many economists predicted as a worst-case scenario due to the Trump administration’s tariff policies has not materialized. Some products have been affected more than others. Below, a look at what’s happened to supplies and prices in popular gift categories.
Games and toys
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Games and toys were particularly susceptible to tariff-related price increases, since most of those sold in the United States are made in China, according to industry trade group The Toy Association. The tariff rate that the Trump administration imposed on Chinese goods became a rollercoaster that started with an additional 10%, peaked at 145% and ended at 47%.
The uncertainty made it difficult for toy stores to decide what to order for the holidays. Dean Smith, co-owner of independent toy stores JaZams in Princeton, New Jersey, and Lahaska, Pennsylvania, said the manufacturers in China from which he buys toys did not pass on their tariff costs all at once, but he has seen their prices increase with each new order.
Smith estimated that wholesale prices for 80% of his inventory increased between 5% and 20%. Some shoppers who don’t buy toys regularly might be surprised by the price increases he adopted in turn, Smith said. A doll that sold for $20 to $25 last year now costs $30 to $35 at JaZams, she said.
“For people with marginal incomes, this is going to be a very difficult holiday,” Smith said.
Electronics
Consumer electronics are mainly manufactured in China and other Asian countries. In 2023, China will account for 78% of U.S. smartphone imports and 79% of laptop and tablet imports, according to the Consumer Technology Association trade group.
Best Buy said in May it would raise prices because of the tariffs. But CEO Corie Barry said late last month that the consumer electronics chain made sure it had computers, phones and other products at different price points, a decision she attributed to helping Best Buy attract more low-income shoppers.
“The consumer is not a monolith,” Barry told reporters.
Game consoles are always a popular holiday item, and console makers made headlines earlier this year when they announced price hikes. Sony increased the price of the PlayStation 5 by $50 to $550 in August, following Microsoft and Nintendo raising the prices of their consoles.
Jeweler’s
Jewelry buyers will likely see higher prices, but that has more to do with the rising price of gold than the tariffs so far, according to David Bonaparte, president and CEO of the Jewelers of America trade group.
The variable tax rates that Trump established for countries that import American goods with a total value less than their exports to the United States affected jewelry in several ways. Watches from Switzerland, for example, were subject to a 39% tariff from July 31 until the country reached a deal with the Trump administration last month to reduce the import tax rate on its products to 15%.
India, which refines many of the diamonds sold in the United States, rushed shipments of the gemstones before a 50% tariff on the country’s products took effect on August 27. Higher prices for jewelry made with diamonds shipped from India will likely start to be felt in 2026, Bonaparte said.
“It’s really a question of what happens after January 1,” he said. “If these tariffs remain in place, then prices will likely increase.”
Christmas decoration
Christmas decorations are another category that mostly comes from abroad, particularly China.
Jeremy Rice is co-owner of House, a home decor store in Lexington, Kentucky, specializing in artificial flowers, wreaths, and table decorations. It said the tariffs slowed production of much of its fall stock and seasonal merchandise such as ribbons. Some larger, more expensive items he didn’t order at all because they would have been too expensive to retail.
Rice increased the prices of the products it did obtain. The popular red berry stalks that House has long sold rose from $8.95 last year to $10.95 because of higher import costs, he said.
“We sell thousands of these berry stems, and every time we sold one, I would cringe knowing what it should have been like, knowing that our supplier paid more for them, which made us pay more for them, which made our customer pay more for them,” Rice said.
Strategic purchases
For those looking to avoid tariff-related price increases, John Harmon, managing director of technology research at technology consulting firm Coresight Research, recommends visiting thrift stores and discount retailers such as TJ Maxx, Marshall’s and HomeGoods. Off-price chains buy much of their inventory from excess stock that would have entered the United States before the new tariffs took effect.
Joe Adamski, senior director at procurement services company ProcureAbility, said books, food and beverages are some of the domestically produced products that make good gifts.
