The U.S. toy industry is under pressure due to Chinese tariffs, which may impact Christmas sales.

The United States has imposed tariffs as high as 145% on Chinese goods, causing a major impact on the toy industry. As a key industry dependent on the Chinese supply chain, toy manufacturers warn that the trade war could result in price hikes, fewer product choices, and impact Christmas sales. Major brands such as Hasbro and Mattel have experienced a drop in their stock prices, while small businesses are facing challenges from supply chain disruptions and rising costs. The industry is worried about facing the dual challenges of product shortages and price increases this Christmas.

Tariff Policy Heats Up, Toy Industry Hit First

According to data from the U.S. Department of Commerce, in 2024, the U.S. imported toys worth $17.7 billion, about 75% of which came from China. This makes toys the fourth largest category of goods imported from China to the U.S., following electronics, clothing, and machinery. The Trump administration recently announced tariffs of up to 145% on Chinese goods, far exceeding the previously estimated 20%, causing upheaval in the industry.

This policy is part of the Trump administration's "Liberation Day" tariff plan, aimed at imposing differential tariffs on specific countries. The toy industry, which has long been excluded from trade tariffs, is now in the spotlight, catching the industry off guard.

Industry Reaction: From Stock Price Drops to Supply Chain Disruptions

The stock prices of major toy companies Hasbro and Mattel plummeted after the tariff news was announced. Although both companies had already factored in a 20% tariff impact in their 2025 financial forecasts, they have yet to publicly address strategies for dealing with the 145% tariff impact.

For small businesses reliant on Chinese manufacturing, the situation is even more dire. Jonathan Silva, co-founder of Massachusetts-based WS Game Company, stated that 100% of his company's products are made in China, and if the situation continues to worsen, layoffs may be inevitable. He admitted, "We are almost at a standstill right now, and although we have about four months of inventory, the future is uncertain."

Supply Chain Bottlenecks and Replacement Difficulties

Greg Ahearn, President and CEO of the Toy Association, stated that the toy industry's reliance on China is not just a cost issue but also involves the accumulation of technology and experience. He pointed out, "This is a skilled labor force, and Chinese workers are not only experienced but also much cheaper than in the U.S."

While there is domestic manufacturing in the U.S., most are focused on automatable products. Toy production still requires a lot of manpower, such as hand-painting doll faces and assembling models. A toy company in California admitted that even with a factory in Ohio, it is difficult to find enough workers, and domestic production costs are much higher than in China. The company further noted that the U.S. doesn't even have factories capable of producing materials for doll hair, "Are we supposed to sell bald dolls?"

Tariff Ripple Effects: Not Just Chinese Manufacturing Affected

Even companies not reliant on China are feeling the ripple effects of the tariff policy. Beate Caso, head of German manufacturer Bruder Toys America, stated that although their products are made in Europe, they still face a 10% tariff and the pressure of rising global shipping costs. She noted, "Global container shortages have led to skyrocketing freight costs, limited supply, and naturally rising prices."

Additionally, many U.S. retailers have begun canceling orders, fearing they won't receive goods in time. This not only affects Christmas sales but also strains company cash flow. Ahearn stated, "If we don't have products, we don't have cash flow, and we can't pay bills."

Government Stance and Industry Lobbying

In response to industry pressure, White House spokesperson, Kush Desai, stated, "If you're worried about tariffs, the solution is simple: make products in the U.S." However, the industry generally believes this is impractical. Ahearn emphasized, "Rebuilding the toy supply chain in the U.S. is almost impossible, at least not in the short term."

To seek policy exemptions, the Toy Association even participated in the White House Easter Egg Roll event, attempting to maintain the tax-exempt status of toy products through public relations efforts.

Industry Concerns as Christmas Approaches

Spring is a critical time for toy production each year, preparing for holiday sales at the end of the year. However, with the slowdown in Chinese production and rising tariff pressures, the industry fears this Christmas will face the dual challenges of product shortages and price increases.

According to the Toy Association, this is the most severe supply chain crisis since the 1980s. At that time, companies tried to find low-cost production sites outside of China but ultimately returned to China due to its mature manufacturing system and complete industrial chain.

References

• Christmas is in the crosshairs as toy industry faces brunt of China tariffs
• Christmas is in the crosshairs as toy industry faces brunt of China tariffs
• 川普害慘美國玩具業！80%來自中國 便宜玩具變奢侈品 業者：沒現金流
• USA-China Tariffs: the impact of the trade war on global markets | Coface
• The Ripple Effect: Tariffs, Trade, and What They Mean for Your Supply Chain
• Christmas is in the crosshairs as toy industry faces brunt of China tariffs
• 川普 | 世界新聞網