As the holiday shopping season approaches, consumers are likely to encounter significant price increases on a range of popular goods, particularly those made in China. In 2023, China made up a jaw-dropping 78% of U.S. smartphone imports and 79% of laptop and tablet imports. The waves caused by the tariffs the Trump administration imposed on Chinese products are still roiling the economy. They apply to a slew of products, from electronics to children’s toys.
The whole tariff saga started out with a 10% tax across the board on Chinese imports. It then shot up to a high of 145% and eventually plateaued at 47%. Because of these tariffs, retailers have been compelled to change their pricing strategies while they continue to absorb rising costs. That’s what retailer Best Buy did in May, when it preemptively raised prices to account for the tariffs. Earlier this year, console manufacturers announced their own price increases.
The toy industry finds itself particularly vulnerable. Most popular toys sold in the U.S. are produced in China, leaving them vulnerable to price hikes caused by tariffs. Dean Smith, co-owner of JaZams, a toy store, reported seeing wholesale prices for 80% of his inventory rise by anywhere from 5% to 20%. That doll, which used to sell for $20 to $25 at retail, now sells for about $30 to $35 in his store.
For people with low incomes, this is going to be a deeply challenging holiday season. Those features add up, Smith pointed out, highlighting the reality that many consumers will endure this holiday season.
Beyond toys, consumer electronics—which are largely manufactured in China and other Asian countries—have experienced double-digit price increases. Holiday decorations, most of which are made overseas, especially in China, are another product line subject to these tariffs. Swiss watches were greeted with a punishing 39% tariff effective July 31. As a result of a recent agreement, the import tariff rate is currently down to 15 percent.
Even the most astute shoppers may be caught off guard by the baby formula riot act. This is due to the fact that manufacturers didn’t pass their tariff costs through consistently or at once. This haphazard, sweater-patchwork approach has left consumers wondering with no idea what to expect and price points between years.
Smith went on to say that toy stores such as JaZams were hurt by the unpredictability of tariffs. This caused confusion in terms of what they should order for the holiday season. Thirdly, retailers are figuring out inventory in an environment where the rules have changed and the future is uncertain.
This is partly because off-price chains like T.J. Maxx, Marshall’s, and HomeGoods have shielded themselves somewhat from the immediate effects of tariffs. These retailers often buy the excess inventory that came into the U.S. before the new tariffs went into effect. As the holidays’ shopping peak period rolls in, they too will get squeezed in their own ability to restock.
Emily Butler, a consumer market analyst, observed that “we’re definitely seeing more cautious spending this year.” Nearly half of all consumers are reworking their budgets due to increased prices in nearly every category.
India moved quickly to reduce tariff impacts. They expedited shipments of finished diamonds before a 50% tariff on their goods went into effect on August 27. This strategy highlights the flexibility and responsiveness of global supply chains. Countries are quickly adapting to changing trade realities to shield their domestic industries.
With the new year right around the corner, the outcome looks dim. Bonaparte, an industry expert, remarked, “It’s really a matter of what happens after Jan. 1,” hinting at potential changes in tariff policies and their implications.
