Tariffs are expected to start showing up more in consumer prices as holiday shopping season starts

The impact of tariffs on consumer prices is expected to become more apparent just in time for the holiday shopping season. President Donald Trump’s tariffs on various items and countries have been in effect since April, coinciding with inflation measures hovering between 2.5% and 3% this year. While economists do not anticipate a significant spike in common inflation measures like the consumer price index, they believe that tariffs will keep these gauges elevated when they would otherwise be decreasing.

Bank of America economist Aditya Bhave stated that there is no question that tariffs have led to higher consumer prices. The impact of tariffs has been somewhat subdued as companies stocked up on inventory before the tariffs took effect and absorbed some of the impact through reduced profit margins. However, Bank of America projects that tariffs will contribute around 0.5% to the core personal consumption expenditures (PCE) measure used by the Federal Reserve to assess inflation. This would result in an inflation rate of 2.9% in September, compared to a rate closer to 2.4% without tariffs.

The differences in percentage points are significant for the Fed, which aims to maintain core inflation at 2%. Two Fed officials expressed disagreement with the decision to lower the central bank’s key interest rate in light of the inflationary impact of tariffs. For consumers, this means bearing approximately 50%-70% of total tariff costs, with businesses shouldering the remainder.

In practical terms, consumers have experienced higher prices for goods like coffee, furniture, and clothing, which saw a 0.7% increase in September. While these items may have a minimal impact on price indexes, they are items that consumers purchase frequently and can influence perceptions of inflation. TD Cowen analysts pointed out that price increases in certain goods can significantly impact consumer confidence, shaping perceptions of inflation.

The upcoming holiday season may see further price increases due to tariffs, particularly on seasonal goods like artificial Christmas trees, which are predominantly imported from China. LendingTree estimates that if tariffs had been in place during the 2024 holiday season, shoppers would have spent an additional $40.6 billion. The firm also estimates that around 70.5% of new tariffs were passed on to consumers in June 2025, resulting in an additional cost of $132 per shopper.

Overall, the impact of tariffs on consumer prices is expected to become more pronounced as we head into the holiday shopping season, with shoppers likely to feel the effects of higher prices on everyday goods.