So what is the best response? I've always felt that kids need a firm grounding in one faith and, if that faith is to be Judaism, it is best to keep the tree out of the house. However I see no problem in helping Christians celebrate their holiday in other houses, hospitals or homeless shelters, as my family has done at Pacific House for years. This would be true of Christian grandparents too.
And then, as much as possible and all year, long, we need to light those Jewish flames. This is especially true in this era of mixed identities and the blurring of lines. For kids, the response is to affirm the values, warmth and joy of our tradition.
Now if it's the adult who wants the tree, that's an entirely different question.