MW How to tariff-proof your holiday shopping list
By Genna Contino
Half of Americans say they're more likely than they were last year to purchase domestic-made products, says survey shared exclusively with MarketWatch
Consumers are expected to prioritize holiday gift giving even if their budgets are squeezed elsewhere - but experts say there are ways to avoid tariff markups when shopping.
When retail stocks plummeted after President Donald Trump announced his tariff plan in April, John McPhee remained calm.
McPhee, the chief executive of Chilewich, a woven-textile designer and manufacturer, was comforted by the fact that 97% of the company's products are made entirely in the U.S. The company's placemats and rugs are designed in New York and manufactured in Georgia, using material sourced and woven in Alabama.
"When the tariffs came, the 3% of our product that we actually make in Asia was a pain in the neck," McPhee said. "But it didn't really matter - it was such a small part of the business."
Chilewich's Nutcracker-themed placemats are featured in the 12th edition of the "Made in America" holiday gift guide, released Wednesday. Created by the Alliance for American Manufacturing, a lobbying group, the guide lists a variety of products made in all 50 states, plus Puerto Rico and Washington, D.C.
The gift guide, once just for aficionados of American manufacturing, has taken on new resonance this holiday season as tariff-wary shoppers hunt for deals.
Half of Americans say they are more likely than they were last year to purchase domestic-made products, according to AAM's "Made in America" survey, which along with the gift guide was shared exclusively with MarketWatch ahead of its release. Three-quarters of respondents said they prefer to buy products made in the U.S. when possible.
Despite consumer sentiment nearing a record low, experts say Americans feeling the squeeze on their household budgets still tend to prioritize spending on family around the holidays. This year, the strategy for savvy holiday shoppers is not just finding a discount, but entirely avoiding the tariff burden by focusing on U.S.-made gifts, imported products with low tariff rates, gift cards and experiences.
"The consumer will have to make choices around where they want to allocate their purchasing power based off of, in part, where they find the most value," said Michelle Meyer, chief economist at the Mastercard $(MA)$ Economics Institute. "This year, you have to try a little bit harder because some of these goods categories will be priced a bit higher as a result of the tariff pass-through."
Read more: Here's how high tariff rates would have to rise to bring manufacturing back to its glory days. Even Trump would be shocked.
Why shopping 100% American-made is virtually impossible
Before the implementation of tariffs, American-made products saw a surge in interest during the pandemic when global supply-chain issues created widespread product shortages according to AAM President Scott Paul.
"Something that everybody experienced were shortages and panic during the pandemic. And intuitively, Americans know that if you produce something here, that's less likely to happen," Paul said. "That's something that I think has carried over, and will continue to drive interest in [products] made in the USA."
From the archives (June 2021): Consumers find shortages and higher prices as COVID-impacted supply chains shift for recovery
But in a globalized economy, shopping for 100% American-made goods is virtually impossible. While final assembly may happen domestically, few products are made entirely of U.S. parts. Retailers often outsource cheaper labor overseas to make specialized materials or equipment, lowering the price tag of the finished product.
AAM curates its annual gift guide to make that easier for shoppers. The list is organized by state and includes products such as clothing cut and sewn by Los Angeles-based manufacturers and doll houses made from U.S.-sourced wood in Virginia. The online retailer Uncommon Goods also has a made-in-USA section, and the retailer American Made Man specializes in goods made domestically.
While it's difficult for U.S. companies to completely avoid conflict from tariffs, they can better absorb tariff costs compared with stores that import most of their materials and products.
Chilewich relies on imported materials to make its Dahlia placemats, which are "a really good seller" but a small fraction of the company's business, McPhee said. "We've just chosen, because it is small, to leave the prices where they were, because we want to keep market share."
Holiday gifts with the highest and lowest tariff rates
Retailers that source products overseas have been trying to avoid passing on costs to consumers, economists say, but that's getting more difficult as pre-tariff inventory diminishes and profit margins narrow.
National Retail Federation chief economist Mark Matthews estimates more than 60% of tariff costs have been absorbed by U.S. businesses, while less than 25% has been passed on to consumers. Retailers are in a dynamic situation, he said, as they figure out how to distribute these costs.
Read more: Trump floats idea of $2,000 tariff dividend checks to most Americans
"They can't continue to absorb all the costs," Matthews said. "But at the same time, they can't just pass the costs on to consumers willy-nilly without thinking about the impact on competition."
Because tariff rates vary for different products from different countries, consumers might notice more inflation for some holiday purchases than for others. In the Mastercard Economics Institute's 2025 holiday report, different holiday gifts and decorations are broken out by their effective tariff rates.
The report found that products with the highest tariff rates include:
-- Leather gloves: 29.3%
-- Artificial Christmas trees: 26.9%
-- Christmas ornaments: 26.6%
-- Sweaters: 25.9%
-- Nativity scenes: 25.5%
-- Clothing: 25.4%
-- Sporting goods: 23.2%
Those listed with the lowest tariff rates include:
-- Books: 4.7%
-- Chocolate: 5.2%
-- Christmas tree lights: 8.4%
-- Perfumes: 9.9%
-- Videogame consoles: 10.6%
-- Makeup: 10.8%
-- Jewelry: 14.7%
The wide disparity in rates allows consumers to make strategic substitutions based on relative prices, according to Meyer.
For instance, shoppers may choose to avoid high-tariff categories like sweaters (tariffed at a 25.9% rate) or imported leather gloves (29.3%) in favor of gifts with significantly lower import duties, such as makeup (10.8%) or jewelry (14.7%).
Similarly, consumers can substitute high-tariff sporting goods (23.2%) and toys for items like books (4.7%) or videogame consoles (10.6%), which cost manufacturers less in import fees to produce.
Look beyond physical products - and 'strike while the iron is hot'
Gift cards, experiences, services and digital subscriptions are inherently tariff-proof gifts because they aren't physical, imported goods, said shopping expert Trae Bodge.
She recommends a site called Gift Card Granny, which sells gift cards up to 10% off their typical price from retailers.
Read more: Small businesses warn they'll probably have to raise prices after the holidays
"You could either buy that gift card and give it as a gift and you'll have saved 10%, or you could buy that gift card and then shop with it and you've essentially saved yourself up to 10%," Bodge said.
The Mastercard Economics Institute expects a higher-than-normal use of gift cards over the holidays. Though they don't eliminate tariff-related inflation, they can help gift givers spend within their budget.
Experts also recommend wrapping up holiday shopping as early as possible. Some retailers ordered fewer quantities this year because of tariffs, so they might sell out quicker.
"Strike while the iron is hot. If you see a price you like, go for it," Matthews said. "We don't know what the dynamic will be a week from now."
-Genna Contino
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November 12, 2025 08:30 ET (13:30 GMT)
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