Retailers made some big bets earlier this year, when they rushed to stock up on extra inventories before the Trump tariffs took full effect. Now, with the 2025 peak shopping season nearly upon us, they’re about to find out if those bets are going to pay off.

The “mad race” to beat the tariffs, especially on goods from China, loaded up retailer balance sheets “more than was comfortable,” says Michael Babbitt, head of trade and supply chain finance origination with Synovus, a diversified financial services company. “Everybody that could beg, borrow and steal to get inventory into the U.S. was doing so.” (Granting Babbitt some poetic license here for his use of the word “steal.”)

Retailers are now drawing down those extra stocks that began filling warehouses in late spring and early summer, in preparation for the tariffs that were slated to take effect on August 7. That’s also the time of the year when sellers traditionally begin loading up on merchandise for the fourth-quarter holiday rush, creating “a double whammy [this year] as they were trying to get inventory across the line,” Babbitt notes. But with that extra cushion of supply comes the danger of being stuck with unsold goods following a sluggish selling season.

Even this close to the traditional Black Friday kick-off, it’s anyone’s guess as to how strong fourth-quarter sales will end up being. Based on what he’s heard from industry groups, Babbitt speculates that smaller companies would be hit the hardest by disappointing results. They’re already feeling the impact of Trump’s cancellation of the de minimis allowance, whereby individual imported packages of up to $800 in value were exempt from duties. “I don’t see that being a consideration with bigger companies,” Babbitt says.

What seems clear at this point is that consumers will pay more for certain items. A survey by Synovus of 400 companies found 46% of respondents saying that input prices “were definitely higher than last year at this time," even though just 22% of that same sampling felt able to raise their own prices in response. “A lot are feeling squeezed in the middle,” Babbitt says, noting that the rising cost of labor is another factor on top of the tariffs.

The recent announcement of a new trade agreement between the U.S. and China — or, at least, the broad outlines of one — has fueled hopes that the confusion and uncertainty spurred by the Trump tariffs will finally begin to abate. Babbitt isn’t so sure. The deal has raised hopes that things will calm down, he acknowledges, “but I don’t think it will.” He points out that the agreement is vague on trade in agricultural goods — an especially sore point, given China’s halt on buying soybeans from American farmers.

There’s always the possibility of another blowup between the U.S. and China, Babbitt points out. And while he doesn’t believe the latest trade deal will exacerbate relations, “I just don’t think the trust is there to weather the next storm.”

What’s more, he suggests, the bad blood between the U.S. and China arising from their recent tiffs is leading to a permanent alteration of the trade landscape. Both nations are moving to diversify their global sourcing, even if they continue to need access to each other’s markets to some extent.

So what does 2026 look like in terms of retailer health and consumer activity? Babbitt calls it “a mixed bag.” A Synovus survey of 200 customers found 78% anticipating further price rises in the coming year. As for consumer sentiment, it’s likely to be strongest at the high end of the spectrum, especially for luxury goods, with the middle to lower end of consumers “definitely feeling the pinch a little more.” For those buyers, “the pain is real.”

That said, while there are “some worries” about 2026, Synovus’s latest intelligence, based in part on expectations that tariffs will be more stable and predictable in the months ahead, indicates that “it will be better than it was last year.”