Some food vendors, sellers of holiday trinkets and a leading hotelier in biblical Bethlehem say Palestinian protests, triggered by what many here view as a provocative show of pro-Israel bias, have hurt their Christmas business.
Yet Bethlehem also offers a stage for a Palestinian rebuttal: banners proclaiming Jerusalem as the eternal capital of Palestine have been draped over facades on Manger Square as a backdrop for Christmas TV broadcasts to a global audience.
The Israeli-Palestinian conflict is keenly felt, perhaps even more so at Christmas, in Bethlehem, just a few kilometres south of contested Jerusalem.
While Palestinians try to draw attention to the barrier when foreigners pour in for Christmas, Trump's policy shift on Jerusalem two weeks ago has emerged as the dominant theme this year. It went against an international consensus that the fate of the city should be determined in negotiations.
Israeli-annexed east Jerusalem houses major Muslim, Jewish and Christian shrines, and Palestinians seek it as a future capital.
In Bethlehem, the fallout was felt immediately.
Palestinian President Mahmoud Abbas was to have received Vice President Mike Pence, a devout Christian, in Bethlehem, but cancelled after the US pivot on Jerusalem.
The snub came as Abbas shifted from cooperating with the United States to rejecting Washington as a Mideast broker.
Meanwhile, Bethlehem's flagship luxury hotel, the 250-bed Jacir Palace, closed because of frequent nearby clashes.
Palestinian activists have called for more protests. In Manger Square, next to the Church of the Nativity built over Jesus' traditional birth grotto, some merchants blamed Trump for a drop in business.
Two souvenir shop owners selling nativity scenes and tree decorations carved from olive wood said they hadn't had any customers by early afternoon.
Mahmoud Salahat, who sells pomegranate juice on the square, said his main source of income, Palestinian citizens of Israel, largely stayed away from Bethlehem during the past two weeks, apparently fearing trouble on the roads.
The Christmas season caps a banner year for tourism in the Palestinian territories, with 2.7 million visitors in 2017, compared to 2.3 million in 2016, said Tourism Ministry official Jiries Qumsieh.
Despite some cancellations, Bethlehem's 4,000 hotel rooms were more than 90 percent booked for Christmas, he said.
Christmas also offers an annual opportunity for Abbas to court international sympathy for long-standing Palestinian demands for statehood in the West Bank, Gaza Strip and east Jerusalem, lands Israel captured in 1967. Abbas rival Hamas, an Islamic militant group that dominates Gaza, seeks a state in all of historic Palestine, including what is now Israel.
This year, TV footage will likely show two large banners hanging from roofs in Manger Square, reading: "Jerusalem will always be the eternal capital of Palestine.
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