Some gifts are meant to be regifted or given to a place like a thrift shop away from the same group of people.

If caught could always say, I liked it so much I found one just like it to give to ..xxxx....

Does she ever come into your house at Christmas?

If she asks where you put it (after giving it away) just comment it has a special place in my computer room where I can enjoy it & think of you every time I see it. (Just make surw computed room door is shut & locked)

Depending, if you are close friends, You could just say....yes, it was a very thoughtful gift. (You would not be lying or telling her how much you like it either)
If you know each other well, you might gracefully say it was a lovely gift but I have always had a problem handling those sparkler things from a trauma I went through & sadly it brings out those memories. I know you had no idea & I really do appreciate the thought & your kindness of sharing the giving spirit of Christmas.

I grew up having to learn the art of saying what I think without hurting the person(s) involved. Not easy but possible. Knowing the person well helps.

My parents didnt have much money when I was growing up & I always ended up triggered by the gifts I was given. They meant well & I knew it...BUT....it didnt stop me from feeling the way I felt. Most times with those gifts I would just stick them away & never use them & most times they never noticed or said anything.

Not an easy situation.