With inflation still hanging in the air and new tariffs looming, many consumers are already feeling the pressure — and it’s only going to get worse as the holiday season approaches. According to recent projections, new tariffs on Chinese imports could drive up the prices of everything from toys to electronics, just in time for Black Friday. Consumers are worried, and understandably so. But here’s the reality: brands are afraid, too — and many are running out of runway to absorb the hit.
The Price Pressure Is Real — On Both Sides
Consumers have spent the past year adjusting to higher grocery bills, elevated rent, and surging utility costs. Now, the prospect of more price hikes on holiday essentials feels like salt in the wound. A recent survey by Morning Consult showed that more than 70% of consumers are concerned about affording gifts and seasonal celebrations this year. The stress is palpable.
But while many people assume that brands can simply “take the hit” and eat the extra costs, that cushion is wearing thin. Over the past 18 months, many brands have been quietly absorbing cost increases to avoid alienating price-sensitive customers. That strategy has helped maintain market share, but it’s not sustainable.
Data shows Americans are still stressed out about affording these necessities.
- 53% of Americans said the cost of groceries was a significant source of stress right now, while 33% said it was a minor source of stress.
- Just 14% said the price of groceries was not a source of stress.
- The next-highest sources of significant stress were the cost of housing (47%), the amount of money saved or earned (43%), and the cost of health care (42%).
Consumers’ expectations for inflation are through the roof, and retailers are starting to make clear there’s nothing they can do to hold prices down in the face of historic tariff rates.
- As public opinion of President Trump’s economic performance sinks, his team is trying to balance what consumers see at stores with what officials argue are offsetting benefits, like lower gas and grocery prices.
- They are also fighting the same “vibes” problem the Biden administration had — inflation’s getting better, but everyone’s feeling worse about it.
Tariffs Could Be the Breaking Point
With tariffs on key imports from China expected to increase later this year, companies that sell apparel, electronics, footwear, and home goods are staring down another wave of cost pressures. For many retailers, those goods are already in transit or sitting in warehouses. The timing — right before the all-important holiday shopping season — couldn’t be worse.
Retailers and brands now face a tough decision: raise prices and risk losing customers, or continue to absorb costs and risk damaging margins. For many, there’s no longer room to maneuver.
How Long Can Brands Keep Absorbing Costs?
The short answer: not much longer.
Even big brands with deep pockets are being forced to rethink their pricing strategies. In earnings calls, several major retailers have hinted that price increases are on the table for Q4. Why? Because inflation, shipping costs, and now tariffs have pushed the limits of what internal cost-cutting and supply chain optimization can absorb.
Small and mid-sized businesses, which typically have thinner margins, are in an even tighter spot. Many are already cutting promotions or reducing inventory levels to brace for the squeeze.
What Can Consumers Expect?
Don’t be surprised if holiday shopping feels more expensive this year, even for the same items you bought last year. Expect:
- Fewer “doorbuster” deals
- Higher price tags on popular imported items
- Limited inventory on lower-priced goods
- Earlier sales events (to spread out the impact)
What Should Brands Do?
If you’re a brand or retailer, now is the time to communicate clearly and strategically. Consumers are willing to accept some price increases if they understand why. Transparency is key. Tactics to consider:
- Highlight product value and durability to justify price changes
- Offer loyalty perks or bundles instead of heavy discounts
- Clearly explain the impact of tariffs and inflation in customer messaging
- Focus on hero products that deliver high margins and consumer satisfaction
The holiday season is a critical time for both consumers and brands, and this year, the stakes are higher than ever. While brands have been shielding consumers from the full brunt of cost increases, the era of silently absorbing price hikes is nearing its end.
Consumers are already stressed. Brands are stretched thin. And tariffs could tip the scales. Transparency, value-driven messaging, and early planning will define who wins the season — and who gets left behind.
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