As U.S.-China trade tensions flare with the imposition of dramatically increased tariffs, American businesses that built supply chains around Chinese manufacturing are facing a reckoning. Few industries are feeling the effects more acutely than holiday décor—a category that, each year, quietly launches into production cycles months ahead of time, reliant on the efficient cross-Pacific movement of goods. For Balsam Brands, a leading purveyor of high-end artificial Christmas trees and holiday products founded by Mac Harman, the new tariffs have brought about a crisis that threatens not just profit margins, but the existence of the company’s fourth-quarter inventory.

In an interview with CNBC’s “The Exchange,” Harman described how the latest round of tariffs—some climbing as high as 145%—will imperil the company’s ability to provide goods to customers in the U.S. this holiday season. For Balsam Brands, the annual tariff bill could surge from $1 million last year to over $100 million, outstripping last year’s entire profits nearly tenfold. “That’s if we brought everything we ordered this year in at today’s rates,” Harman notes. “Now we have paused orders. We’ve canceled orders. There’s no way we can do that.”

A Race Against Time and Tariffs

Tariffs, which are sometimes discussed abstractly in policy circles, quickly become tangible for companies operating on annual retail cycles. Most American holiday décor—including the majority of artificial Christmas trees—originates in China, where a highly specialized network of suppliers has long produced at scale for U.S. and European markets.

“We brought as much inventory in before Inauguration Day as we could, just in case, but I don’t think anyone saw 145% tariffs,” Harman says. “That’s effectively a trade embargo at that rate.”

The global nature of Balsam’s supply chain adds further complexity. Goods already finished or partially assembled in China are now stranded, awaiting either tariff relief or, more likely, political resolution. As the selling season approaches, companies like Balsam Brands face an impossible calculus: absorb what could amount to a prohibitive tax, or risk having insufficient inventory available during the critical holiday period.

“We’re doing everything we can to shift some supply, leverage what we have left over from last year. But we’re just not going to have things to sell in the industry unless we can open things up, start producing again and release finished goods that are held in China,” Harman warns.

Reshoring Reality Check

Some policymakers, seeing tariffs as a tool to encourage domestic manufacturing, may assume the solution is to make these goods in America instead. But the nature of artificial trees—particularly pre-lit models, whose assembly involves complex and labor-intensive wiring—means domestic production is not readily feasible at scale or cost.

“We did a project in the first Trump administration to figure out, is there any way we can manufacture pre-lit Christmas trees in America?” Harman says. “They’ve actually never been made here. When the lights came pre-lit on the tree, attached, it became so tedious—it’s not suited to a high-wage manufacturing market.” Even after consulting with leading design firms, including the innovative team behind the computer mouse, Harman’s research concluded that an American-made pre-lit tree would cost $3,000 at retail—a sixfold increase over the current average.

While other industrial categories—like steel or apparel—have at least some viable domestic production, Harman’s experience underscores a less discussed reality of global trade: entire networks of manufacturing know-how, process refinement, and supply chain specialization have grown up in places like China, and they do not easily migrate.

Pivoting to Survive

With domestic manufacturing off the table and Chinese-held goods at risk, Harman’s focus has shifted to finding alternative supply routes and international markets. “We’re just focused on how we can get as much inventory as we can from other places to support this Christmas,” he explains, pointing to ramped-up efforts in Europe, Canada, and Australia, where tariff pressures are less acute.

Yet, the pivot is no panacea. Even with aggressive resource allocation into non-U.S. markets, the U.S. remains the company’s biggest and most important season, particularly in the high-stakes fourth quarter. Rivals in the industry face similar constraints.

As the clock ticks down, Harman and industry peers are lobbying for relief in Washington, D.C., seeking a temporary pause that would allow current inventories to clear customs and reach U.S. consumers. “We’re asking for a 90-day pause on the Chinese tariffs,” Harman says. “We think that would really help us not only save Christmas, but it would let all these American companies that have goods that are being held in China, half finished or finished, bring that inventory back, and also repatriate the cash deposits that are now locked up.”

The incentive is not just for companies—consumers aren’t immune from the fallout. “If we don’t restart production in the next few weeks, it’s not a matter of it being crazy expensive. There’s just not going to be things out there,” Harman warns. “You might be able to make 50% profit on [a used tree] if you sell it on eBay this Christmas, because there’s just not going to be new items.”

The Stakes for American Retail

Seasonal retail—spanning from Halloween costumes to Easter baskets—often relies on intricate global supply chains, but perhaps no industry is so seasonally dependent as Christmas. An inability to secure sufficient artificial trees and décor doesn’t just affect Balsam Brands, but also the big box retailers and e-commerce platforms that depend on full shelves come fall.

Economists warn the broader effect could be both inflationary, as scarcity pushes up prices, and deflationary, as lost sales shrink overall company revenues, curbing hiring and investment. For businesses like Balsam Brands, a drawn-out trade impasse would not just threaten profitability, but potentially their very survival.

For now, the industry’s message—to policymakers and the public alike—is clear: Christmas is produced in the spring. Without immediate clarity or relief, the boxes may sit in Chinese warehouses, and thousands of American homes may find little under—or on top of—the tree this coming holiday season.