Tariffs and supply chain chaos led to the “most challenging year ever” for the $15B artificial Christmas tree industry, impacting costs and consumer demand.
The $15 billion artificial Christmas tree industry is navigating what the head of one of its largest wholesalers calls “by far the most challenging year ever,” as it battles volatile tariffs, production shifts, and uncertain consumer spending.
According to the American Christmas Tree Association, artificial trees are the overwhelming choice for the season, with 83% of U.S. households opting for a fake tree due to convenience and durability. However, this market—which relies entirely on overseas manufacturing—was heavily impacted by a spring spike in tariffs.
Chris Butler, CEO of National Tree Company, stated that when tariffs on China reached 145% this spring, nearly all production in that segment stopped for a month. While levies were reduced, the entire supply chain was jolted, leading to concerns over potential shortages.
The China Problem and Supply Chain Diversification
The U.S. consumer market is unique, with an average of one and a half artificial trees per household and 15 to 20 million purchased annually. All raw materials for these products originate in China, creating a concentrated risk.
In response to trade tensions, National Tree Company began diversifying its production 18 months ago, moving manufacturing to Southeast Asian countries like Cambodia and Vietnam. This year, approximately 60% of its goods are being sourced from outside China.
However, even with diversification, the raw materials still originate in China, creating bottlenecks. “It’s not difficult to set up a new factory in different countries, but once you do that, you still need the raw materials from China,” Butler said. This slowdown has led to predictions of a supply shortage this season.
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Uncertainty and Shifting Consumer Behavior
Retailers faced difficulty gauging inventory after a year marked by inflation, layoffs, and tariff uncertainty. Over half of holiday orders were placed by the end of May—two months earlier than in 2024—as buyers attempted to mitigate risk or cancelled orders deemed unprofitable.
Now that the season is underway, consumers appear to be pulling back. A survey by Rocket Mortgage and Redfin found nearly 30% of U.S. residents are decreasing their decorating budgets, citing a need to save money and economic uncertainty.
Despite the headwinds, Butler advises shoppers to buy early. “Despite the price increase from the tariffs, there are absolutely going to be deals,” he said, noting that “softness in demand” will push retailers to offer promotions.
Looking ahead, Butler, who also leads the Christmas Trade Group, is actively lobbying in Washington to “save Christmas for 2026,” focusing on securing supply and keeping costs lower to “maintain the affordability of the holiday.”
