De minimis has ended and holiday sales will see an immediate impact

De minimis’s impending doom has finally arrived as the tax loophole that allowed for goods under $800 to come into the US duty-free officially closed as of August 29.

Naturally, retailers across the US are on edge, especially as the holiday season looms and consumers remain cautious about their spending.

Two experts Retail Brew spoke with said the impact of the tax exemption will be immediate and possibly most visible during the holiday season.

“It’s not a one-size-fits-all plan that when we talk to our clients, like ‘I’m going to pass on all the costs to the customer,’” Irina Vaysfeld, principal in KPMG’s trade and customs practice, told Retail Brew, explaining that while some retailers might choose to pass on some costs to consumers, others might evaluate price increases based on their SKUs.

“There is a lot of work that’s gone into thinking about how the consumer will be impacted,” she said. “But we, of course, do expect an impact this year.”

Per Vaysfeld, the goods that were already in transit to the US will not benefit from the de minimis exemption once they arrive, which means holiday shoppers should factor in imminent price increases as they write out their gift lists. This also means retailers will see some significant changes in either the amount of products shoppers are willing to purchase for the holidays or the $$ they’re willing to spend.

Retailers like Under Armour, meanwhile, have already projected a $100 million dent in their profits with tariff costs.

“Consumers’ budgets were already very tight, and we saw consumers scaling back their preferences, moving to private label brands or chicken rather than beef, or gravitating toward warehouse clubs and mass merchandisers like Walmart and dollar stores,” John Harmon, senior retail and technology analyst at Coresight Research, told Retail Brew. “So the consumer is really stretched.”

He added that beyond passing on the costs to shoppers, he has seen some retailers simply “drop” selling certain products, assuming consumers will just not buy them at higher prices—a trend that’s likely to carry into the holiday season.

However, it’s not all doom and gloom for the holidays, if you believe Harmon, who said shoppers will continue to shop, but just looking for cheaper alternatives.

“Consumers will find a way to get goods for the holiday,” he said, listing as examples “mass merchandisers, secondhand, thrift stores, and dollar stores.”