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The significance of the title is twofold: one, a white elephant gift is a gift that nobody wants. This is symbolic of the unwanted pregnancy of the girl and the American. Early in the story, she notices that the hills look like white elephants; however, as they continue to talk she says that the hills are actually very lovely and don't resemble white elephants at all - reminiscent of her change in feelings about being pregnant.
Another reason for the title is that the two never come out and say exactly what they are talking about, but it is very awkward and tense - sort of like the phrase " the elephant in the room" (something awkward and obvious that no one discusses outright).
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