US Retailers Face Holiday Headwinds From $29 Billion Tariff Shock
A new report forecasts tariffs will add an average of $132 to each shopper's holiday expenses, creating significant pressure on consumer spending and retail margins.
US shoppers are facing a more expensive holiday season as a potential $29 billion in tariff-related costs threatens to dampen consumer spending and squeeze retailers during their most critical sales period. The projected impact, part of a wider $40.6 billion in import taxes, could add an average of $132 to each consumer's holiday bill, according to a recent analysis from LendingTree.
The findings cast a shadow over a retail sector that is heavily reliant on strong fourth-quarter performance. The added costs are not distributed evenly across shopping lists. Consumers purchasing electronics could see the largest per-shopper burden at an estimated $186, while those buying clothing and accessories may face an additional $82 in costs. Even smaller categories like toys and personal care products are expected to see price hikes.
"For a huge number of American families, $132 is a significant amount of money," noted Matt Schulz, LendingTree's chief consumer financial analyst, in a comment on the findings. Schulz warned the added expense could lead households to either take on more debt or cut back on gift-giving.
This pressure has been building for months. A KPMG survey from October found that one-third of senior retail executives reported declining sales and nearly 40% experienced shrinking gross margins due to tariffs. According to the survey published in Forbes, two-thirds of these businesses were passing up to half of their increased costs directly to consumers.
Economists widely characterize the import duties as a direct tax on consumers. "It's a new tax on consumers, and it's going to result in meaningfully higher prices for things like furniture, toys, apparel and footwear," said Rob Handfield, a professor of supply chain management at North Carolina State University.
Despite the headwinds, the National Retail Federation (NRF) is projecting a resilient consumer. The industry's largest trade group forecasts that holiday sales will increase between 3.7% and 4.2% over last year, potentially reaching $1.02 trillion. While acknowledging falling consumer confidence and the impact of tariffs on gift prices, NRF President and CEO Matthew Shay expressed cautious optimism that the holiday season would not be "ruined."
Retailers find themselves in a difficult strategic position. Many have been absorbing a portion of the tariff costs to avoid alienating price-sensitive customers, but this has come at the expense of profitability. Others have been forced to raise prices on specific goods, with some imported items like clothing and textiles seeing price hikes of 30-40%.
The tariff landscape remains a key variable for the U.S. economy. While the Trump administration recently rolled back duties on certain food items to ease grocery prices, the broader levies on consumer goods remain a central concern for the retail sector. As shoppers begin their holiday spending, the true impact of these higher costs on sales volume and corporate earnings will become a critical data point for the health of the U.S. consumer.