NEW YORK (AP) — The Ah Louis Store in San Luis Obispo, California, turns into a winter wonderland every holiday season.
Green garlands, giant nutcrackers, baubles and bows go up in early November on the historic downtown building that houses the gift shop. Inside, customers can choose from over 500 different types of ornaments and a variety of holiday gift baskets.
“We really just make it a magical spot,” co-owner Emily Butler said. “Whether you come
in or not, we want to make sure that we’re spreading that holiday joy.”
But Butler says she and her twin sister-business partner had to work harder this year to turn browsers into buyers and to make a profit. Many of the decorations and stocking stuffers they sell are made overseas and either did not arrive or got more expensive when President Donald Trump imposed unusually high taxes on imported goods, she said.
In response, the sisters focused their selection on more profitable items like nutcrackers and gift baskets. They've also noticed customers cutting back, selecting a $100 gift basket over the $150 version, or buying one ornament instead of several, Butler said..
“We’re definitely seeing more cautious spending this year,” she said.
Along with the unpredictable tariffs, stubborn inflation and weak hiring have shaken consumer confidence in the U.S. economy. The vast majority of U.S. adults say they’ve noticed higher than usual prices for groceries, electricity and holiday gifts in recent months, according to a December poll from The Associated Press-NORC Center for Public Affairs Research.
A Gallup index that summarizes Americans’ assessments of current economic conditions fell to a 17-month low in November. Consumers also indicated less enthusiasm for spending money on holiday gifts; their estimated gift budgets decreased $229 between October and November, the largest drop Gallup has recorded at that point of the holiday shopping season. The survey was conducted in November, partially during the government shutdown, which might have tempered spending plans.
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. 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, according to industry trade group The Toy Association. The tariff rate the Trump administration imposed on Chinese goods became a rollercoaster that started at an additional 10%, peaked at 145% and ended 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 JaZams in Princeton, New Jersey, and Lahaska, Pennsylvania, 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.
Smith estimated that 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 he adopted in turn, Smith said. A doll that sold for $20 to $25 last year now costs $30 to $35 at JaZams, he said.
“For folks with marginal incomes, this is going to be a very difficult holiday,” Smith said.
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, according to the Consumer Technology Association trade group.
Best Buy said in May that it was raising prices due to tariffs. But CEO Corie Barry said late last month that 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.
“The consumer is not a monolith,” Barry told reporters.
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, Bonaparte said.
“It’s really a matter of what happens after Jan. 1,” he said. “If these tariffs are still in place, then prices will probably increase.”
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, he said.
"We sell thousands of these berry stems, and every time we sold one, I flinched from knowing what it should have been, 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.
For those looking to avoid tariff-related price increases, John Harmon, managing director of technology research at technology consulting company Coresight Resarch, 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.
