The holiday season has always come with its share of markups—limited editions, festive packaging, and that annual rush for the latest gadgets or toys. But this year, there’s another trend affecting holiday bargains: tariffs. As trade tensions ripple through global supply chains, the cost of festive cheer is climbing, and businesses are no longer shy about passing the tab along.
According to a recent Economist Impact study, 79% of supply chain leaders say their companies are now willing to pass higher input costs on to customers as a result of tariffs. That represents a major shift in corporate behavior. For months, many businesses have absorbed the shocks of trade volatility, hoping to maintain brand loyalty and price stability. But persistent geopolitical friction, combined with the mounting costs of materials and manufacturing, have made that strategy unsustainable.
Why tariffs have started a costly chain reaction
In a recent webinar with The Economist Group, their trade and geopolitics expert, Oliver Sawbridge, highlighted how tariffs are feeding directly into rising costs, particularly in the sectors that dominate holiday wish lists, from smartphones and TVs to appliances and toys.
“Tariffs lead to higher input costs,” he noted, “which are feeding into inflationary pressures, particularly in the manufacturing, electronics and consumer goods sectors.” The result: thinner margins for producers, higher shelf prices for consumers, and a steady drumbeat of price recalibrations throughout the retail landscape.
Compounding the problem, 76% of global business leaders say they now face reduced availability of components due to trade policy shifts, according to the study “Supply chain’s big bet on AI for geopolitical resilience.” The result isn’t just costlier goods, but scarcer ones. Behind the scenes, companies are forming dedicated teams whose sole purpose is to monitor political developments and model their financial implications. That’s not exactly the carefree spirit of the season—but it’s emblematic of how geopolitics now drives business strategy.
How businesses and shoppers are adapting
For companies, adaptation increasingly means transparency and pass-through pricing. Retailers are training consumers to expect and accept price increases tied to external shocks. A recent Zero100 study on consumer attitudes finds that, “The time may be right to start explaining costs, availability and delivery options directly to some segments,” adding that it may be especially relevant for those struggling with inflation. That’s a significant psychological shift from the “always low prices” era. It’s also driving new conversations about adaptive supply chains, diversified sourcing, and domestic manufacturing.
For consumers, this may mean adjusting expectations. A “deal” this holiday season might not look like it did five years ago. With production costs elevated and global logistics constrained, price tags reflect a more realistic accounting of what it takes to get goods from factory to front porch.
AI: The hopeful side of supply chain volatility
While much of the tariff story centers on disruption and rising costs, there’s still room for optimism this season. As Oliver put it, “The hopeful part of the story is that firms have an ability to respond to all of this. And technology, particularly AI, can help businesses model disruption in real time, optimize trade routes, and shift suppliers before bottlenecks form. Essentially, the more visibility and predictive control firms gain through AI, the less consumers will pay for that volatility.”
This is why we see that 71% of supply chains have accelerated their adoption of AI. Using capabilities like real-time decision support—which 85% of companies have started integrating—companies are empowered to respond quickly and effectively to rapidly shifting market dynamics and limit impacts up and down the supply chain.
AI is also transforming supplier monitoring, with 77% of companies reporting full or partial integration today. Monitoring is helping businesses identify potential challenges, notify suppliers, and assign them risk scores based on their potential exposure to disruption.
These tools not only reduce the lag between policy change and operational response but also make it easier to communicate those decisions across finance, logistics, and marketing teams in near real time. In practical terms, that means fewer shocks passed on to consumers, and more stability across the retail calendar. For supply chain professionals, the advice is clear:
- Invest in tools that unify data across your end-to-end network.
- Adopt real-time, scenario modeling to proactively forecast cost impacts—and identify areas of opportunity.
- Use AI and ML to accelerate decision making, improving agility without sacrificing other KPIs.
- Collaborate cross-functionally so pricing, sourcing, and marketing teams can respond in unison when trade conditions change.
AI doesn’t eliminate volatility—but it makes it manageable. And in a world where trade rules can change in an instant, that adaptability is a competitive advantage.
Full carts, full hearts? Thank a supply chain planner.
As shoppers fill carts and countdown clocks tick, it’s easy to see tariffs and price hikes as just another headline, but beneath the surface lies a deeper story of adaptation and innovation. Supply chain professionals are proving that even in a world of fragmentation and friction, technology and teamwork can keep goods—and good cheer—moving. The lights still twinkle, the cocoa still steams, and somewhere in the background, a planner is running yet another simulation, ensuring that the season’s magic isn’t blunted by Grinchly tariffs.
Learn more about the state of AI in supply chain by downloading the full Economist Impact report, “Supply chain’s big bet on AI for geopolitical resilience” or watch our webinar summarizing the key insights.
Ready to start thinking strategically about your AI deployment? Learn about purpose-built AI for smarter supply chains from Kinaxis.
