Toy manufacturers in the United States outsourced manufacturing to China in the 1980s to cut costs. Nearly half a century later, this decision could ruin them.
Almost half of the more than 400 U.S. companies surveyed by the trade group Toy Association said President Donald Trump’s 145% tariff on Chinese imports imposed in April would shut them down within months.
The group said about 80% of toys sold in the United States are made in China. American toy makers who can’t afford the higher costs will either try to push higher prices to consumers or stop making products altogether, which could jeopardize the crucial holiday shopping season.
“There is no magic wallet,” John Kimble, chief financial officer of Santa Monica, California-based Jakks Pacific Inc., said on a conference call Tuesday. “Our industry has seen too many factories, wholesalers and retailers go bankrupt over the past decade.”
He said Kimbur recently traveled to China with Jakks CEO Steve Berman to meet with local manufacturers, which has been meeting with local manufacturers for decades to discuss how to cut costs. The Hedgehog Collectibles, a manufacturer of Disney Princess Dolls and Sonic, is stocking stocks in the U.S., reviewing the products it will sell in the future and seeking to reduce spending on its business.
Trump’s tariffs are struggling to compete for slowing sales after a surge amid the pandemic lockdown. The Toys Association said in January that U.S. revenue fell 7% last year after falling last year. Last week, the government was sued by a group of companies, including trustees, for alleging unconstitutional tariffs.
On Wednesday, Toronto-based Spin Master Corp. linked to the toys to children’s program Paw Patrol, withdrawing the prospects for 2025 “until the environment stabilizes.” Management will hold a conference call Thursday morning to discuss its results.
About 96% of our toy and gaming companies are small and medium-sized enterprises, and cannot easily re-layout given the quality and affordability of manufacturing in China. Molly Zeff, co-founder and CEO of New York-based Flying Leap Games, believes that demand for her $30 wing IT party game will collapse if she transfers the fees to consumers.
“As an industry, we’re absolutely overwhelmed by that,” Zeff said. “I haven’t made the best-selling game yet.”
More than 40% of respondents who conducted a Toy Association survey in April said they were delaying or canceling orders due to tariffs. The largest recipient of the U.S. shipping container, the Port of Los Angeles, is expected to see a third of the shipment in the coming weeks.
GI Joe and Hasbro Inc., a maker of Little Pony Toys, predict a profit rate of $180 million this year, depending on whether the tariffs are at current levels.
Hasbro CEO Chris Cocks said on an April 24 revenue call that the company is transferring production of hundreds of items from China to other locations. He said the company now purchases products in eight countries, which could be expanded to 10. About half of the toys and games it sells in the United States are made in China.
Changes in suppliers bring costs. Rooster says most Play-Doh Putty sold in the U.S. comes from China. If a company transfers production to Türkiye of another source, there are other expenses that can be passed on to the consumer.
“We will have to raise prices within the 145% tariff regime with China,” the cock said. “We are just trying to do this as selectively as possible and minimize the burden on the fans and families we serve.”
Mattel Inc., a manufacturer of Barbie dolls and hot-wheel miniature cars, has also been looking for other places to make toys. China will be less than 40% of its global manufacturing industry this year, down from 50% in 2024.
“Our team has been fully involved in the analysis and planning of a variety of scenarios,” Chief Financial Officer Anthony Disilvestro said on a conference call in February.
Mattel plans to report its first-quarter financial results on May 5.
This article was generated from the Automation News Agency feed without the text being modified.
