US consumers are facing a squeeze in their shopping budgets this holiday season, hit by the double whammy of tariffs and high energy costs.

While overall inflation is creeping up, toy prices are surging, with an increase of 6.6% in the last year, the latest US consumer inflation data showed. Other products that depend on both overseas shipments and petroleum in their manufacturing processes are also posting higher prices.

The toy industry, which manufactures a majority of products sold in the US in China, remains exposed to the Trump administration's shifting tariff policies. At the same time, toys are largely made of fossil-fuel-based plastics, meaning higher oil prices from the Middle East war are likely also contributing to the sticker shock consumers will run into on retail shelves.

"Those dual issues appear to be showing up in pricing," said David Silverman, senior director at Fitch Ratings, who focuses on retail and consumer companies. "The impact from the Iran conflict on commodity costs and shipping costs will certainly persist for the next several quarters." Prices rose in September for apparel and footwear, too, according to the US Consumer Price Index report. But the gain in toy prices was greater than in other consumer categories, just as Americans start drafting their holiday gift lists. Toy prices rose 4.2% from August, seasonally adjusted.

Soon after returning to the White House and imposing sweeping levies on imports from China, President Donald Trump in April 2025 acknowledged that his tariff policies might boost prices for consumers. At the time, he elicited backlash when he suggested that children might have "two dolls instead of 30 dolls." Since then, his approval rating has dropped sharply, particularly on economic issues. A Reuters/Ipsos poll through October 5 showed just 21% of voters approve of Trump's handling of cost-of-living issues, with 67% disapproving.

US tariffs on Chinese goods have eased since the Trump administration's initial 145% rate, which then fell to 30% in May 2025. The US and China also reached an agreement in late September to reduce tariffs on $30 billion each of imported and exported goods.

But current prices still reflect the fallout from higher tariff rates, said Jay Foreman, the CEO of Basic Fun, a Florida-based toy company that makes Tonka trucks and Care Bears. The toy industry used those rates last year to price the goods that hit shelves this fall, he said.

"Tariffs add a noticeable cost to toys and other goods," Foreman added. "Reducing them now will over time lower the price of toys as long as other global issues subside, like the various wars that are pushing up fuel and raw material costs." Barbie maker Mattel (MAT.O) is "seeing some moderate inflationary pressures associated with events in the Middle East," Chief Financial Officer Paul Ruh said on an earnings call in August after reporting that tariff-related costs squeezed the toy maker's margins.

Hasbro (HAS.O) has absorbed "higher input costs," Chief Financial Officer Gina Goetter said in July. The two companies did not immediately respond to requests for comment on the factors affecting their prices.