The U.S. toy industry braces for a significant price surge as new tariffs on Chinese imports take effect. Nearly 80% of toys sold in the United States are sourced from China, and recent developments have intensified concerns among manufacturers and retailers alike. Last month, former President Donald Trump imposed an additional 10% tariff on Chinese goods, prompting the Toy Association to lobby vigorously for exemptions, albeit unsuccessfully.
Toy Association’s Advocacy and Challenges
The Toy Association, a national industry group known for sponsoring major events such as the North American International Toy Fair, has been at the forefront of advocating for the toy sector. They argue that the industry’s reliance on China’s high-skilled, cost-effective workforce cannot be quickly or easily replicated elsewhere. Despite their efforts, companies anticipate a 15% to 20% increase in toy prices by the back-to-school shopping season.
Jay Foreman, CEO of Basic Fun, expressed caution in his approach to the shifting economic landscape. His Boca Raton, Florida-based company manufactures popular toys like Tonka trucks and Care Bears in China. Foreman refrained from rushing shipments late last year due to uncertainty over a potential 60% tariff discussed by Trump during his campaign trail.
“If you plan in a chaotic environment, you have a much greater chance of being wrong than being right,” Foreman said.
In response to the tariffs, some companies have turned to innovative strategies. Foreman plans to offer new spins on existing toys to refresh their appeal without changing their core design.
“Maybe I’ll change the color of the box,” he said.
Meanwhile, Abacus Brands has taken a different route. The company found a Texas factory capable of producing its product, Pixicade—an interactive game that converts doodles into playable video games—at no extra cost. The U.S.-made version of Pixicade is expected to hit stores by August.
However, transitioning manufacturing away from China presents challenges. The expertise required for toy production is not readily available in other countries, and it will take time to develop similar capabilities elsewhere. Some companies have opted to move parts of their manufacturing operations to Mexico to be closer to the U.S. market.
Impact on Small Businesses
Greg Ahearn highlighted the dire situation for small businesses that constitute approximately 96% of the American toy industry.
“It’s untenable,” Ahearn said, noting the significant impact on these businesses.
The price range U.S. consumers typically pay for toys—between $4.99 and $19.99—leaves minimal room for price increases without affecting demand. As a result, toy companies face the difficult decision of absorbing costs or passing them on to consumers.
Adding to the complexity, Trump’s administration also moved forward with implementing 25% tariffs on products imported from Canada and Mexico. While U.S. automakers received a temporary exemption from these tariffs, toy manufacturers must navigate the added financial pressure without such relief.
The Toy Association continues its efforts to educate Congress about the unique challenges faced by toy companies. Their lobbying aims to underscore the industry’s dependence on specialized manufacturing expertise found in Chinese factories that cannot be easily replicated.
Author’s Opinion
The new tariffs will likely burden both manufacturers and consumers in the U.S. Toy companies face a difficult decision of either absorbing the increased costs or passing them along to consumers, which could reduce demand. Small businesses, in particular, are under significant strain, and the long-term effects of these tariffs could harm the competitiveness and sustainability of the toy industry.
Featured image credit: Look and Learn
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