As the vacation procuring season begins, tariffs are anticipated to be extra strongly mirrored in shopper costs

Shoppers carry Macy’s and Nordstrom bags at Broadway Plaza in Walnut Creek, California, USA on Monday, December 16, 2024. The Bureau of Economic Analysis is scheduled to release personal spending figures on December 20.

David Paul Morris | Bloomberg | Getty Images

Although the impact has been muted so far this year, the tariffs are expected to be in line with the prices consumers pay in time for the holiday shopping season.

President Donald Trump’s tariffs on numerous items and individual countries, imposed in April, coincided with standard measures of inflation, which have fluctuated between 2.5% and 3% this year.

While economists don’t expect major increases in broad measures like consumer prices and personal consumption price indexes, they do expect tariffs to keep those measures high at a time when they would otherwise fall.

“There have been some questions in recent months about whether tariffs have led to higher inflation for consumers,” Bank of America economist Aditya Bhave said in a note. “We believe there is no debate – tariffs have driven up consumer prices.”

The impact of tariffs has so far been muted as companies built up inventories before the tariffs were imposed and absorbed some of the impact through lower profit margins.

However, Bank of America expects the tariffs to increase the core PCE measure the Federal Reserve uses to assess inflation by about half a percentage point. With tariffs, BofA estimates September inflation would be 2.9%. Without tariffs, the inflation rate would be closer to 2.4%. The numbers are similar to those quoted by Fed Chairman Jerome Powell on Wednesday. Annualized core PCE was 2.9% in August.

These percentage differences are important for the Fed, which is trying to keep core inflation (excluding food and energy) at 2%, a level above which it has been since March 2021. Two Fed officials – regional presidents Jeffrey Schmid of Kansas City and Lorie Logan of Dallas – said Friday they disagreed with their colleagues’ decision Wednesday to cut the central bank’s key interest rate.

They are also important for consumers. Bhave estimates that buyers bear about 50-70% of the total customs costs, while companies bear the rest.

Stroke at the checkout

In practice, that meant higher prices for things like coffee, furniture and, more recently, clothing, which rose 0.7% in September, according to the Bureau of Labor Statistics. Although they are only minor components of price indices, they are items that consumers purchase frequently and can create perceptions of inflation, which can lead to a self-reinforcing cycle that drives up prices.

“Inflation in certain goods can have an outsized impact on consumer confidence, even if those items have a negligible weight in the consumer price index,” analysts at TD Cowen said in a note. Price increases on items like eggs create “a constant, noticeable feedback loop in the grocery store every week. Such items shape perceptions more than their statistical significance suggests.”

The company pointed out that there could be more of them this holiday season since almost all of the artificial Christmas trees are imported from China, where Trump tariffs are inflicting high costs.

“While artificial Christmas trees are not unique, they are a clear example of how seasonal goods with high tariffs can influence consumers’ perceptions of inflation,” Cowen said.

Had the tariffs been imposed during the 2024 holiday season, shoppers would have spent an additional $40.6 billion, according to LendingTree estimates based on data from multiple government and private sources.

LendingTree’s Budget Lab further estimates that approximately 70.5% of new rates have been passed on to consumers as of June 2025.

“That means even more Americans would have had to turn to credit cards and personal loans to cover gift-buying expenses,” said Matt Schultz, the company’s chief consumer finance analyst. “That’s the unfortunate reality that many people would have faced.”

The same estimates put the tariff cost at $132 per buyer, according to LendingTree.