There's one more item for your holiday budget list: tariffs

A LendingTree analysis projects that ongoing tariffs could add $28.6 billion to U.S. consumer spending this holiday season, averaging $132 per shopper, with electronics and apparel seeing the largest price increases. Retailers are expected to absorb an additional $12.0 billion in costs, totaling a $40.6 billion burden. This outlook emerges as consumers report already facing tariff-driven price hikes and adjusting purchasing behaviors, while the legal basis for presidential tariff authority is pending a Supreme Court review.

Analysis

The LendingTree analysis projects a significant financial burden from ongoing tariffs, estimating an additional $28.6 billion for U.S. consumers this holiday season, averaging $132 per shopper. Electronics and clothing/accessories are particularly affected, projected to incur an extra $186 and $82 respectively, together comprising 60.7% of the tariff impact on winter holiday gifts. Retailers are also expected to absorb $12.0 billion in costs, bringing the total estimated burden to $40.6 billion.

This tariff-induced cost pressure is already impacting consumer behavior, with a Morning Consult survey indicating 49% of shoppers are experiencing increased prices on groceries due to tariffs, and 41% are buying fewer items. This suggests a direct inflationary effect on household budgets and potential headwinds for consumer discretionary spending, particularly in categories heavily reliant on imported goods, which accounted for $377.7 billion in 2024 winter holiday spending.

Further uncertainty surrounds the future of tariff policy, as the U.S. Supreme Court is set to review the President's authority to impose tariffs under the 1977 International Emergency Powers Act on November 5. While some tariffs, such as a fentanyl-related one, have been adjusted, a significant 45-47% rate remains on certain Chinese imports, maintaining a complex and evolving trade landscape.

Key Decisions for Investors

• Investors should closely monitor consumer spending trends and retail sector performance, particularly for companies with high exposure to imported electronics and apparel, given the projected $40.6 billion tariff burden.
• Evaluate the supply chain resilience and pricing power of companies heavily reliant on imported goods, as retailers are absorbing $12.0 billion in tariff costs.
• Pay close attention to the upcoming Supreme Court ruling on presidential tariff authority and any subsequent trade policy shifts, as these could significantly alter the cost landscape.
• Consider the broader inflationary impact on consumer discretionary spending and adjust portfolio allocations to sectors less sensitive to tariff-driven price increases or those with strong pricing power.