Holiday Shoppers Face Uncertainty as Tariffs Disrupt Retail Plans

Retailers scramble to adapt as shifting trade policies impact inventory and pricing ahead of peak season.

With summer temperatures soaring, U.S. retail executives are feeling the heat of an entirely different kind: the approaching holiday season and the uncertainty surrounding President Donald Trump’s fluctuating trade policies.

Inventory Juggernaut for Retailers

Businesses that produce and sell consumer goods are in a critical phase of planning holiday orders and setting prices, a process made significantly more complex by unpredictable tariff rates. Companies like Balsam Hill, an online seller of artificial Christmas trees and decorations, are finding it challenging to finalize product catalogs.

“The uncertainty has led us to spend all our time trying to rejigger what we’re ordering, where we’re bringing it in, when it’s going to get here,” said Mac Harman, CEO of Balsam Hill’s parent company, Balsam Brands. He added, “We don’t know which items we’re going to have to put in the catalog or not.”

The typical retail planning cycle for the winter holidays begins in January, with the bulk of orders finalized by the end of June. However, the continuous adjustments to tariffs have forced retailers to factor these changes into their calculations, creating a significant question mark over consumer choices in November and December.

Toy Industry Feels the Squeeze

The U.S. toy industry, which sources approximately 80% of its products from China, is particularly affected. Production schedules were delayed this year, pushing back manufacturing from April to late May due to a proposed 145% tariff on Chinese goods. While this rate has since been adjusted, the impact on small and medium-sized toy companies is substantial, with manufacturing activity down significantly compared to last year, according to Greg Ahearn, president and CEO of the Toy Association.

This delay means that many holiday toys are only just reaching U.S. warehouses. The possibility of tariffs impacting the replenishment of any breakout hit toys that emerge in September remains a concern for retailers, notes James Zahn, editor-in-chief of Toy Book.

Consumers Brace for Higher Prices and Limited Selection

For consumers, the consequences could mean a less diverse selection of desired items and potentially higher prices. Some suppliers and buyers have reduced their holiday product lines to mitigate the risk of being stuck with expensive, unsold imports or facing significant tax bills.

Independent toy store owners are already experiencing the direct impact. Dean Smith, co-owner of JaZams in Princeton, New Jersey, and Lahaska, Pennsylvania, detailed a recent scenario where the wholesale cost of some products increased by 20% due to tariffs, forcing him to explore pricing adjustments.

“In the end, I had to eliminate half of the products that I normally buy,”

—Dean Smith, Co-owner of JaZams

Smith noted that he had to forgo stocking the kids’ edition of the Anomia card game due to anticipated pricing issues, opting instead for a lower-cost building set to ensure availability.

Similarly, Hilary Key, owner of The Toy Chest in Nashville, Indiana, decided against her usual practice of testing new products early for fear of incurring high import taxes on delayed orders. She has been inundated with price increase notices from vendors, with one company, Schylling, raising prices on orders by 20%.

“My concern is not that I’ll have nothing, because I can bring in more books. I can bring in more gifts, or I can bring in just things that are manufactured in other places,” Key stated, expressing worry about maintaining a comprehensive product assortment for all developmental ages and special needs.

Navigating the ‘Tariff Whipsaw’ Effect

The retail sector continues to adopt a reactive strategy to navigate the White House’s tariff policies. Recent adjustments to import rates from countries including Brazil, the European Union, and Mexico, with a delayed effective date, have provided a brief window for importers to bring in seasonal merchandise at a 10% tariff rate.

This rush ahead of potential future increases has boosted activity at ports. The Port of Los Angeles reported its busiest June in 117 years, with July imports also showing strength, according to executive director Gene Seroka. “In my view, we’re seeing a peak season push right now to bring in goods ahead of potentially higher tariffs later this summer,” Seroka commented.

Seroka described this trend as a “tariff whipsaw effect”—a slowdown when tariffs are imposed, followed by a rebound when they are paused. He anticipates that consumers will likely face lower inventory levels, reduced selection, and higher prices heading into the holidays.

To counter this, stores like JaZams have started placing holiday orders two months earlier than usual and doubled their warehouse space to accommodate stockpiled items. Some consumers are also proactively purchasing items expected to be popular, such as Jellycat plush toys, to beat potential price hikes.

Despite these efforts, retailers face the ongoing challenge of balancing consumer affordability with maintaining a profitable product range.

Balsam Brands‘ Harman acknowledged that his company will likely offer a less extensive selection of ornaments and trees this year, as the window for meaningful product additions is closing. “Our purpose as a company is to create joy together, and we’re going to do our very best to do that this year. We’re just not going to have a bunch of the items that consumers want this year, and that’s not a position we want to be in,” he concluded.