Both the direct effects of warming on a species’ vital rates and indirect effects of warming caused by interactions with neighboring species can influence plant populations. Furthermore, herbivory mediates the effects of warming on plant community composition in many systems. Thus, determining the importance of direct and indirect effects of warming, while considering the role of herbivory, can help predict long‐term plant community dynamics. We conducted a field experiment in the coastal wetlands of western Alaska to investigate how warming and herbivory influence the interactions and abundances of two common plant species, a sedge, Carex ramenskii, and a dwarf shrub, Salix ovalifolia. We used results from the experiment to model the equilibrium abundances of the species under different warming and grazing scenarios and to determine the contribution of direct and indirect effects to predict population changes. Consistent with the current composition of the landscape, model predictions suggest that Carex is more abundant than Salix under ambient temperatures with grazing (53% and 27% cover, respectively). However, with warming and grazing, Salix becomes more abundant than Carex (57% and 41% cover, respectively), reflecting both a negative response of Carex and a positive response of Salix to warming. While grazing reduced the cover of both species, herbivory did not prevent a shift in dominance from sedges to the dwarf shrub. Direct effects of climate change explained about 97% of the total predicted change in species cover, whereas indirect effects explained only 3% of the predicted change. Thus, indirect effects, mediated by interactions between Carex and Salix, were negligible, likely due to use of different niches and weak interspecific interactions. Results suggest that a 2°C increase could cause a shift in dominance from sedges to woody plants on the coast of western Alaska over decadal timescales, and this shift was largely a result of the direct effects of warming. Models predict this shift with or without goose herbivory. Our results are consistent with other studies showing an increase in woody plant abundance in the Arctic and suggest that shifts in plant–plant interactions are not driving this change.