U.S.-China Trade War Escalates: U.S. Levies 145% Tariff on Chinese Toys, Toy Industry Faces Existential Crisis
President Trump of the United States imposed a 145% tariff on toys made in China, ending the tariff exemptions and causing a severe impact on the American toy industry. Approximately 80% of toys in the U.S. are imported from China, and the tariffs have led to price increases, leading to cash flow disruptions, order cancellations, and pressure on companies to lay off employees. Industry insiders note that shifting production lines to other countries is not feasible in the short term. Governor Newsom of California has filed a lawsuit challenging the legality of the tariffs, sparking backlash across the United States.
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04/19 04:36
U.S.-China Trade War Escalates: U.S. Levies 145% Tariff on Chinese Toys, Toy Industry Faces Existential Crisis
President Trump of the United States imposed a 145% tariff on toys made in China, ending the tariff exemptions and causing a severe impact on the American toy industry. Approximately 80% of toys in the U.S. are imported from China, and the tariffs have led to price increases, leading to cash flow disruptions, order cancellations, and pressure on companies to lay off employees. Industry insiders note that shifting production lines to other countries is not feasible in the short term. Governor Newsom of California has filed a lawsuit challenging the legality of the tariffs, sparking backlash across the United States.
Chinese-Made Toys Hit with Heavy Tariffs, U.S. Market Supply Chain Disrupted
The U.S. government has imposed a 145% tariff on Chinese-made toys, ending the tariff exemption for these products that had been in place since Trump's first term. This policy has directly impacted the U.S. toy industry. According to data from the U.S. Department of Commerce, the U.S. imported $17.7 billion worth of toys in 2023, with 75% coming from China. The Toy Association noted that about 80% of toys on the market are made in China, making the new tariffs significantly impactful on the entire industry.
Toy Association President Greg Ahearn stated, "This is the most severe supply chain crisis we've faced since the 1980s." He pointed out that China has a well-established toy manufacturing infrastructure and low labor costs. Many processes still require a lot of manual labor, such as hand-painting doll faces and assembling details, which are difficult to replicate in the U.S.
Corporate Response: Price Increases, Shipping Suspensions, and Layoff Pressures
Faced with high tariffs, companies are forced to adjust their strategies. MGA Entertainment CEO Isaac Larian said, "We have no choice but to raise prices by double digits." Having run the company for 46 years, he admitted that the tariff impact has put the business on the brink of survival.
MGA has a factory in Hudson, Ohio, specializing in producing Little Tikes plastic toys, primarily exported to China. However, China's retaliatory tariffs on U.S. goods are as high as 125%, hindering exports. Larian mentioned that the factory, which employs about 700 people, is considering partial layoffs. He noted, "Even if we could expand domestic production, the costs would still be much higher than in China, and there are no factories in the U.S. that can make doll hair. What are we supposed to do, sell bald dolls?"
Jay Foreman, CEO of another toy company, Basic Fun!, also stated that their molds and factories are all located in China, making it impossible to relocate in the short term. He pointed out, "This isn't something we can just walk away from." After the tariffs were officially implemented, Basic Fun! has completely suspended shipments to the U.S. to avoid unpredictable tax risks upon import. He admitted, "Without products, there's no cash flow, and we can't cover daily expenses."
Retailers Cancel Orders, Cash Flow Crisis Emerges
High tariffs have led retailers to cancel orders. The Toy Association noted that many retailers originally relied on Chinese supplies for Christmas goods and toys, now facing the dual pressures of supply disruption and soaring costs. Ahearn stated, "If we don't have products, we don't have cash flow, which means no money to pay the bills."
This situation is especially critical for small and medium-sized toy manufacturers. Ahearn pointed out that these companies have limited capital and cannot afford the high costs of relocating production lines and rebuilding supply chains. Even if some U.S. factories have automation capabilities, they can only produce a few items and cannot replace China's vast production capacity.
Chain Reaction of Export Disruption and Industry Chain Fracture
In addition to U.S. companies being hit, Chinese exporters are also affected. Many Chinese factories have halted production due to a sudden drop in orders. According to reports, toy and electronic product manufacturers in Guangdong, Dongguan, and other areas have experienced a production halt. Some companies have even gone on early holidays, awaiting policy clarity.
At a trade fair in Yiwu, Zhejiang, China, many exporters reported that U.S. clients have canceled or suspended orders, with some containers even being asked to return while en route. These changes not only affect Chinese exports but also further disrupt the global supply chain.
Rising Internal Opposition in the U.S.
California Governor Gavin Newsom has filed a lawsuit against the federal government, questioning the legality of Trump's invocation of the International Emergency Economic Powers Act to impose tariffs. He stated, "Eighty percent of the toys under my children's Christmas tree come from China, and these tariffs cause real harm to families and businesses."
Additionally, nonprofit organizations and small business groups have filed lawsuits in federal court, arguing that the tariff policy was not approved by Congress, violating the principle of separation of powers. According to polls, more than half of Americans oppose the tariffs, indicating that the policy has sparked widespread controversy domestically.
