By Mark Seavy

After a year in which supplier costs, wholesale prices, and retail prices were anything but guaranteed, the tariff landscape for the U.S. market is forecast to be more stable in 2026.

U.S. supplier executives we polled anticipate increased wholesale and retail prices to hold, albeit with some adjustments throughout the year. However, the scale of tariffs (50% or more for goods imported from certain countries) are likely to work against reducing prices to pre-tariff levels.

And new research from the German think tank Kiel Institute for the World Economy suggests that the long-term impact of tariffs will result in higher U.S. consumer prices. That is due to U.S. importers having long-term agreements with suppliers that cannot change quickly.

Additionally, U.S. importers cannot quickly shift production outside of China, given the expertise there for certain manufacturing techniques, like hand stitching for footwear or plastic molding for toys. In the case of China, tariffs started last April at 145% but have since been lowered to around 50%. And yesterday, at the World Economic Forum in Switzerland, President Trump announced he does not plan to move forward with new tariffs on eight European countries.

Kiel’s findings run counter to previous claims that the tariffs, first deployed last April but revised over the course of 2025, have been revenue generating for the U.S. and a foreign policy tool that sees other countries bearing the brunt of costs.

Kiel reported only a small portion of the tariff costs were being covered by foreign producers. Foreign exporters absorbed 4% of the tariff increases by cutting prices, while importers and U.S. consumers took on 96%, according to Kiel’s analysis of $4 trillion of shipments between January 2024 and November 2025.

Companies like Hasbro, Mattel, and Jazwares began moving production to countries like Vietnam, Cambodia, and India prior to the tariffs being implemented, a trend that is likely to accelerate in the coming years.

Some companies, like tactical apparel supplier 5.11 Tactical, have based their manufacturing outside China yet still had to make “selective” price increases,  Elias Sabo, CEO at 5.11’s parent Compass Diversified Holdings, told investors in a conference call earlier this month. The higher prices on some products were in a line sold through 123 of 5.11’s stores as well as through retailers like Dick’s Sporting Goods and Cabela’s. 5.11 has licensing agreements with firearms supplier Sig Sauer and with Electronic Arts for its Battlefield 6 videogame, the apparel for which launches February 1.

“The pricing for key character-based products will likely remain the same, but there will likely be ‘gentle’ increases in other categories to cover costs from tariffs,” a licensing executive with a costume company said at the recent Halloween and Party Expo in Las Vegas, NV.

One factor weighing against further price increases in 2026 is that suppliers and retailers are better prepared for the impact of tariffs. This is especially true in comparison to last year, when retailers and suppliers halted orders for several weeks in April and May to gauge the impact of tariffs. In many cases, a more predictable cadence for orders is forecast this year given that retailers and suppliers have had a year to “reevaluate” and “stabilize” business, said Mark Von Ohlen, Brand Licensing Manager at Rubies Costume Co.

In the case of toys, the size of the companies and the ability to absorb costs remains important. While price increases were passed on for toys last year, Hasbro, for example, forecast $80-$180 million in a tariff-related hit to its bottom line last year. It also laid off 150 employees in June 2025. But Hasbro has projected reducing its reliance on China to less than 40% of its production (down from 50%) and is shifting some manufacturing to India. Mattel has made similar moves to Vietnam and other countries. The bottom line, according to analysts we polled, is that the largest toymakers could gain market share as smaller competitors are priced out.

“It will be interesting to see how this all plays out across all the product categories,” an analyst said. “This may accelerate consolidation that was already underway prior to the imposition of tariffs as smaller companies are less equipped to handle [the] impacts.”