Tariffs Threaten to Push $28.6 Billion in Extra Holiday Expenses Onto Consumers

A LendingTree analysis estimates that the 2024 winter holiday season would have incurred an additional $40.6 billion burden on gift purchases if current tariffs had been in place, with consumers shouldering $28.6 billion ($132 per shopper) and retailers absorbing $12.0 billion. Electronics and clothing/accessories would have accounted for 60.7% of the consumer tariff burden, driven by their high import percentages and an estimated 70.5% tariff pass-through rate. This highlights significant financial pressure on households and potential shifts in consumer spending, particularly in import-heavy categories, potentially increasing reliance on credit.

Analysis

A LendingTree analysis indicates that current tariffs would have imposed an additional $40.6 billion burden on 2024 winter holiday gift purchases, with consumers shouldering $28.6 billion, or $132 per shopper, and retailers absorbing $12.0 billion. This substantial cost increase is attributed to an estimated 17.8% effective tariff rate and a 70.5% pass-through rate to consumers, as estimated by The Budget Lab at Yale. The overall sentiment surrounding this potential impact is moderately negative, reflecting pessimism regarding consumer financial health.

Electronics and clothing/accessories would have accounted for 60.7% of the consumer tariff burden, with per-shopper impacts of $186 and $82 respectively. This is largely due to their high import dependency, with 88.0% of clothing and accessories and 69.0% of electronics being imported, contributing to $377.7 billion in imported goods spending during the holiday season. These categories represent significant exposure to trade policy shifts.

The projected tariff impact suggests significant financial pressure on households, potentially leading to increased reliance on credit cards and personal loans to cover gift expenses, as noted by LendingTree's Matt Schulz. This could also prompt a shift in consumer spending behavior, with families potentially reducing gift-giving or opting for lower-cost alternatives, impacting discretionary retail sectors and potentially increasing credit risk.

Key Decisions for Investors

• Monitor consumer discretionary spending trends, particularly in import-heavy categories like electronics and apparel, for potential demand elasticity impacts
• Evaluate retail companies' pricing power and supply chain diversification strategies to mitigate tariff-related cost pressures
• Assess consumer credit quality and the performance of credit providers, given the potential for increased reliance on debt for holiday spending