Tuesday’s inflation data will be closely watched for signs that businesses are beginning to pass the cost of tariffs on to U.S. consumers.

One category where we’re already seeing evidence of that? Toy prices, which ticked up nearly 2% in June’s CPI.

At the start of the year, it was safe to say that 80% of the toys sold in the U.S were manufactured in China.

“Right now, that number is very much so in flux,” said Kylie Cohu, an analyst with Jefferies.

The big toy makers are diversifying into countries like Vietnam and Indonesia, where tariffs aren’t as steep as the ones President Donald Trump has threatened on Chinese imports, she said.

“They’re still higher than the zero that they were before,” Cohu said.

And because toys and games are made and sold on slim margins, higher costs are rippling through the sector on a faster timeline.

The Walmarts and Targets of the world have more flexibility to absorb some tariff costs, according to Terry Esper, a professor of logistics at The Ohio State University.

“The larger distributors and retailers may be able to weather these storms if you will,” he said. “It’s the small to mediums” that might have a hard time keeping their prices competitive.

That includes Color Wheel Toys, an independent shop in Albuquerque. Owner Keri Piehl imports a lot of her products from countries in Asia and the European Union.

“We’re constantly kind of reevaluating pricing,” she said — and trying to figure out which products customers will accept a markup on, which ones to drop from her inventory, and which ones the shop will just make less money on.

“If it becomes untenable, I’m prepared to shut down my business. That’s just the end of that,” she said.

According to Terry Esper at Ohio State, the holiday shopping season could be a test of which toy retailers can survive the trade war.