Holiday decorators in Michigan are facing a Grinch stealing part of the Christmas tree business.
The American Christmas Tree Association says most U.S. families use artificial trees that are imported and subject to heavy tariffs.
That could help Michigan real tree growers who provide millions of trees nationwide annually.
But the founder and CEO of artificial tree company Balsam Hill, Mac Harman, says tariffs are forcing price hikes for much of the season’s holiday décor.
The following interview has been edited for length and clarity.
Mac Harman: For artificial trees, pre-lit trees, all of those are made in Southeast Asia. 87 % of artificial trees imported to the U.S. last year came from China. It’s going to be lower this year because we and many others have diversified our supply chains to other parts of Southeast Asia. But there’s a tremendous amount of labor that goes into a pre-lit artificial tree.
Most of the reasons that people choose artificial trees are around convenience and longevity. What’s really convenient is you don’t have to spend an hour or more stringing the lights on the tree. And that’s a job that Americans don’t like doing when they set up their farm-grown trees.
And it’s a job that Americans didn’t want to do in factories, which is why pre-lit artificial trees were never made in the United States. That’s why we see them coming in from overseas.
From a farm-grown tree standpoint this year, maybe they have some increased costs affecting something they use on the farm. The price of the tree may not change as much.
But you still need the lights and the tree stand. And those are generally imported as well. Certainly the lights are all imported. And so those costs are up even more because, unfortunately, Christmas lights are tariffed even higher than pre-lit Christmas trees.
Quinn Klinefelter, WDET News: When you were looking at what was going on with tariffs as you were plotting your sales for the holidays this year, how difficult was it? Tariffs would go up, they’d go down again. Is it possible, even with diversifying supply chains, that there could be a shortage of trees?
MH: This year has been the most difficult running a business in my 25 years being a CEO, more difficult than COVID. And it is exactly because of trying to manage the tariffs. Literally the day after the presidential election, we started shipping as many products in as we could because it was talked about that there was going to be a so-called Day One tariff on Inauguration Day. So we and most major retailers shipped-in a lot. Then, on Day One, there wasn’t any tariffs.
There was an announcement that there would be a change on April 2nd. So we all scrambled and manufactured as many goods as we could and shipped them in before April 2nd. Everyone kind of independently made a decision to cut back around 15%-20%. So across the industry about 15% fewer trees were imported this year. We don’t have official data yet because the data was shut down during the government shutdown and they haven’t caught up. But we also think demand is going to be a little bit slower because the prices have gone up.
I think what we’re going to see is that there won’t be as many trees available at clearance. There are consumers who say, “Hey, an artificial tree lasts me 10 years. I can get by with the one I have this year. I’m going to wait ‘till after Christmas and buy one next year.” I don’t think we’re going to see as many of those deals this year. And we’re starting to see across the major retailers, as well as Balsam Hill, that we’re running out of stock on the most popular models because there just aren’t as many to go around this year.
QK: Let me play devil’s advocate. President Trump has long argued that the reason he wants to use tariffs is because he wants to have products made in the U.S. Obviously I’m paraphrasing, but if you’re making something and you’re depending on imports, well, you should be making it in the U.S. instead. So there might be a little bit of short-term pain, but suck it up and start building your stuff in the U.S. What’s your reaction to that argument?
MH: I think it’s fantastic that the president wants to bring strategic good manufacturing back to the U.S. I’d love it if my cell phone, telecommunications equipment, ships, things that we need for our defenses could be made in the U.S. What I don’t think needs to be made in the U.S. are non-strategic goods. And certainly Christmas trees are a non-strategic good, meaning that they don’t have any national security interest.
And they’ve actually never been made in the US. So it’s not even a matter of bringing it back. When the idea for the pre-lit artificial tree came about, the workers in the factories that made unlit artificial trees said they literally did not want to get paid to put lights on a tree. They said they were going to go find another job. And the entire industry moved in the early 1990s over to Thailand at the time.
We are in discussions with the Trump administration in D.C. Pretty much every official I’ve talked to, and I’ve had the privilege to talk to many, agrees with that. We’re hoping that, once things settle down with the U.S. Supreme Court case over IEEPA authority for tariffs, we will see more targeted tariffs. Just like we’ve seen these carve-outs for things that don’t grow here, like bananas and coffee and chocolate, I think we’re going to start to see that for some other non-strategic industries. So I’m hoping that we will see some tariff relief for the Christmas industry in the coming months.
QK: If you did want to try to start making them in the U.S. in some fashion, would that even be possible?
MH: We looked at that back during the first Trump administration. The only way we could manufacture artificial Christmas trees, pre-lit artificial trees in the United States would be if we could invent ways that reduce the labor costs. And we got to a point where a tree that we sell today for $800 would need to sell for about $3,000, back when we looked at this six or seven years ago. And that just isn’t feasible. We have taken another look at it now and not enough things have changed to make any difference in that.
I’ve spent a lot of this year in Washington, D.C., talking with the administration as well as Congress about this holiday decor issue. What we’re hoping for and what we think is going to happen is that President Trump’s going to do something like he did back in 2019, when he was putting the 301 tariffs on China in place. He delayed them until after Christmas to help Christmas retail. That’s public, he spoke about it. At the same time, many Christmas decorations were placed on list 4B, which was tariffed at 0%. So pre-lit Christmas trees have not been tariffed above 0% until this year.
I do think we are going to see some kind of relief from the administration. Going into the mid-term elections next year, you want consumers to be really happy. If everyone goes into Christmas and the conversation around the dinner table is about how expensive the mashed potatoes and the roast beef are, or whatever you’re eating, that’s not going to be a super Merry Christmas from at least an economic standpoint. For us, even though we’ve already imported all the goods we’re going to sell this year, if we know relief is coming next year, there are ways we can cut costs even more. We could potentially lower prices as we’re selling things for the rest of this season.
Right now we’re staring at even higher tariffs next year because the tariffs would be in place for the whole year. Whereas this year they’ve been in place only part of the year. And we brought a lot of our inventory in before those tariffs went into place.
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