Businesses face a tough decision this holiday season: Run a Black Friday promotion and see their profits drop, or charge full price and risk turning off buyers.
Some business owners said sharply higher U.S. tariffs on imports are raising their costs, giving them less room to roll out aggressive holiday sales.
Lisa Cheng Smith, founder of Yun Hai Taiwanese Pantry, a New York City-based retailer that imports products from businesses and farms in Taiwan, said her costs have jumped 20% to 50% this year from 2024 because of U.S. tariffs on imports from Taiwan and other Asian countries.
In past years, Yun Hai has offered a 15% Black Friday discount as a way to drive holiday purchases, with Cheng Smith telling CBS News that the annual promotion “is a really important thing for us.” This year, however, she’s unsure how much of a discount she can afford to offer, given her higher operational costs resulting from tariffs.
“It’s complicated because of tariffs and how the retail math works,” Cheng Smith said. “Do we offer less of a discount and try to preserve margins, or do we use the same promotion language and structures that customers have come to expect?”
For small business owners, such calculations can make all the difference, she added. “What we do from October through December is equal to the whole rest of the year in terms of sales, so every day is more high stakes,” she noted.
Retail experts said higher tariff costs for retailers and other businesses could mean fewer, and paltrier, Black Friday discounts this year.
“There will be discounts and deals — that’s what Black Friday is about. Very few retailers will want to shun that completely, but I think they will be more surgical and selective in the discounting,” Neil Saunders, managing director and retail analyst at GlobalData, told CBS News. “They will perhaps discount fewer items, and some discounts will be less generous in terms of the amount of money off.”
Dan Peskorse, whose company, Upstream Brands, sells a range of merchandise under different labels on Amazon and other e-commerce sites, also said higher tariff costs are forcing him to rethink his Black Friday strategy this year.
For previous Black Fridays, Peskorse said Upstream Brands typically offered discounts of up to 30% on products sold under the company’s flagship brands, including ThinkFit, which makes meal-prep bags and containers, and Ash Harbor, a maker of small home goods.
Not this year. “This is the first year that we are not offering across-the-board discounts on products,” he said, noting that the decision was “100%” related to tariffs.
Peskorse has taken steps to mitigate the impact of tariffs, including raising prices and absorbing the extra costs that come with importing goods from China and India. The only tool he has left to control costs and preserve his business’s profits is to scrap discounts, he said.
The average U.S. tariff rate has increased sevenfold since the beginning of 2025 to 16.6% as of Nov. 11, according to EY-Parthenon chief economist Gregory Daco. Those higher duties are pushing up the prices of imported goods as retailers pass on some of the costs to shoppers, he noted.
“It’s going to be a strange season”
Squeezed by tariff costs, many businesses are also grappling with a slowdown in holiday spending by lower-income consumers still feeling the impact of persistent inflation.
“I think the rubber is going to hit the road when we get into Black Friday,” said Sonia Lapinsky, a retail analyst at management consulting firm AlixPartners. “Consumers are telling us they are pulling back on holiday spending this year, holding on to their dollars and putting their money in critical places, not in discretionary buckets.”
Discounts are a powerful tool for incentivizing consumers to spend money, she added.
“It’s the only way retailers will get them in the door, because they can’t stomach this,” Lapinsky said. “So it’s going to be a strange season. If retailers get it wrong, they’re risking the biggest selling season they have.”