Tariffs Spur Holiday Price Hikes, Closures Loom

The retail sector faces mounting pressure ahead of the 2025 holiday season due to 145% tariffs on Chinese imports. Small businesses, toy makers, and specialty retailers warn of price hikes, inventory shortages, and potential closures.

China produces nearly 80% of toys and 90% of Christmas-related products sold in the United States. The high import duties imposed by the US government are already disrupting purchasing patterns and supply chain planning. Retailers are delaying or canceling orders for essential holiday inventory—especially toys, artificial trees, and decorations—according to The New York Times. 

Greg Ahearn, CEO, the Toy Association, representing 850 US manufacturers, stated: “We have a frozen supply chain that is putting Christmas at risk. Without immediate action, a toy shortage this holiday season is highly probable.” A Toy Association survey of 410 toy companies with annual revenue under US$100 million revealed that over 60% have canceled orders due to the tariffs, while nearly half face potential closure within months if the tariffs persist.

The ripple effects extend to suppliers and retailers. Kara Dyer, founder, Storytime Toys, placed a US$30,000 order before the tariffs. Now, she faces US$45,000 in duties. “I cannot place another order if these tariffs remain. It is not viable,” she said, adding she might need to pause her business.

Retailers are passing costs to consumers. Jennifer Bergman, owner, West Side Kids in NYC, said some toys now cost twice as much as last year. “I may not stay in business for Christmas,” she said after consulting a bankruptcy lawyer.

Mauricio Martínez, Managing Director, Kantar Mexico, noted: “Tariffs create real pressure to raise prices, but doing so risks losing volume and revenue, leading to excess inventory.”

Artificial Christmas tree prices are also soaring. Larry Gold, owner of Aldik Home in Los Angeles, who typically imports seven 40-foot containers annually, faces US$1 million in tariffs on a US$600,000 shipment. “Nobody can afford to pay these duties. A tree once priced at US$1,000 will now exceed US$2,000, effectively killing the product,” he said.

The uncertainty is reshaping consumer behavior. According to Sky Canaves, an analyst and author of the US Holiday 2024 Recap and 2025 Preview report, consumers are buying early. “Toys are a holiday category with rising demand, given that 80% of them are imported from China,” Canaves said.

Despite yearly purchasing trends, November and December accounted for 75% of Q4 online sales in 2023. Retailers are urged to prepare for early demand while sustaining inventory and promotions through peak months.

Canaves added that consumers, though price-conscious, may still indulge later in the year: “Some will splurge a little to enjoy the holidays despite the costs.” Mobile commerce is playing an increasing role. Representing 55% of holiday e-commerce sales in 2024, mobile shopping is expected to grow as consumers use their devices to compare prices and find deals.

The Toy Association is lobbying for a 24-month tariff reprieve to allow domestic manufacturers to adjust production. However, even with relief, shipping costs are expected to surge as importers scramble to meet demand, echoing pandemic-era freight challenges. Nick Mowbray, co-founder of Zuru Group, which supplies toys to Walmart and Target, said his company halved its holiday marketing budget to US$60 million. If tariffs persist, he predicts consumer prices will rise 50% to 100%. “That will be unaffordable for many families,” he said.

With the most critical shopping season approaching, retail executives warn that the future of their businesses—and the affordability of Christmas for millions of American families—hinges on how long these tariffs remain in place.