Mattel to Increase U.S. Toy Prices and Shift Manufacturing from China Due to Tariffs

Mattel Inc. plans to raise prices on some U.S. toys due to a 145% tariff on Chinese imports, part of President Trump's trade policy. CEO Ynon Kreiz stated the company will adjust prices to offset costs, with some products already seeing increases. Mattel is also reducing reliance on Chinese manufacturing, aiming to lower China's production share to below 40% by 2025. Despite a 2% sales increase in Q1, Mattel reported a $40.3 million loss and withdrew its full-year earnings forecast due to trade policy uncertainties.

Tariffs Prompt Price Hikes

In its latest earnings report, Mattel confirmed that it will increase prices “where necessary” to offset the rising costs associated with the new tariffs. The 145% tariff on Chinese imports has placed considerable pressure on the toy industry, where nearly 80% of products sold in the U.S. are manufactured in China, according to the Toy Association.

Mattel Chief Executive Officer Ynon Kreiz acknowledged the impact of the tariffs during a call with analysts, stating that the company is taking “pricing action in its U.S. business” to mitigate the financial burden. While the company did not specify which products would see price increases, Kreiz noted that 40% to 50% of Mattel’s toys are still expected to retail for $20 or less.

A pricing analysis by Telsey Advisory Group revealed that some increases are already visible. For example, a Barbie doll with a swimsuit sold at Target rose 42.9% in one week in April, reaching $14.99.

Manufacturing Diversification Strategy

In tandem with the price adjustments, Mattel is accelerating its long-term strategy to reduce reliance on Chinese manufacturing. Currently, China accounts for approximately 40% of Mattel’s global production. The company plans to relocate the production of 500 toy products this year to facilities in other countries, up from 280 products moved last year.

Kreiz emphasized that Mattel sources from seven different countries and aims to reduce China’s share of its global production to below 40% in 2025. The company has set further targets to cut U.S. imports from China to less than 15% by 2026 and under 10% by 2027.

To ensure supply chain resilience, Mattel is also enlisting multiple factories in different countries for some of its most in-demand toys. This approach is intended to prevent product shortages and maintain consistent availability in stores.

Financial Performance and Forecast Withdrawal

Despite the challenges, Mattel reported a 2% increase in first-quarter sales, reaching $827 million for the period ending March 31. However, the company also posted a wider quarterly loss of $40.3 million, or 12 cents per share, compared to a loss of $28.3 million, or 8 cents per share, in the same period last year. Analysts had expected a loss of 10 cents per share on $786.1 million in sales, according to FactSet.

Mattel’s Chief Financial Officer Anthony DiSilvestro estimated that the current tariffs would cost the company approximately $270 million in 2025. While the tariffs had not yet impacted earnings for the first quarter, the company is bracing for future financial strain.

Due to the ongoing uncertainty surrounding U.S. trade policy, Mattel has withdrawn its full-year earnings forecast. The company cited the difficulty in predicting consumer spending and U.S. sales performance, particularly with the critical holiday season ahead.

Industry Context and Executive Commentary

The toy industry at large is feeling the effects of the trade war. With the majority of toys sold in the U.S. being produced in China, the 145% tariff has created a ripple effect across manufacturers and retailers. President Trump acknowledged the potential impact, stating that dolls could cost “a couple bucks more” as a result of the tariffs.

Kreiz has publicly advocated for zero tariffs on toys and games, arguing that such a policy would provide the greatest access to play for children and families worldwide. “Zero tariffs for toys gives the greatest number of children and families access to play,” he told investors.

Despite the challenges, Kreiz expressed confidence in Mattel’s diversified and flexible supply chain, calling it a “clear advantage” during this period of economic and geopolitical uncertainty.

References

• Mattel announces price hikes on sought-after toys because of tariffs
• Mattel CEO confirms plans to raise prices as he calls for zero tariffs on toys
• Mattel plans to raise prices on some toys to offset tariff costs
• Mattel CEO confirms plans to raise prices as he calls for zero tariffs on toys
• Mattel plans to raise prices on some toys to offset tariff costs
• Mattel plans to raise prices on some toys to offset tariff costs
• Mattel plans to raise prices on some toys to offset tariff costs
• Mattel announces price hikes on sought-after toys because of tariffs