In New York, the vibrant annual toy trade show united toy designers, manufacturers, and store buyers this past weekend. However, alongside discovering this year’s top holiday items, discussions were abuzz about President Donald Trump’s recent declaration. Just days prior, he suggested increasing tariffs on Chinese goods to 20%, following an initial rise introduced in February. By the event’s conclusion on Tuesday, curious attendees had their answer, launching more in-depth talks about the potential impact on toy pricing.
China supplies almost 80% of toys sold in the U.S., according to The Toy Association, the national group behind this show, previously dubbed the North American International Toy Fair. With this revelation, toy producers are re-evaluating and renegotiating product costs with retailers and eyeing possible cost-saving measures.
Greg Ahearn, CEO of The Toy Association, anticipates a 15% to 20% rise in prices for various toys such as games, dolls, and cars by the back-to-school season. Given that U.S. consumers are typically comfortable with prices between $4.99 and $19.99, there’s minimal room for an increase without repercussions, Ahearn highlighted, describing the situation as unsustainable. This concern is further compounded because a significant portion of the American toy sector, about 96%, comprises small businesses.
President Trump also enacted a 25% tariff on imports from Canada and Mexico, affecting several companies that shifted production closer to U.S. borders. Nevertheless, he temporarily exempted U.S. automakers from these tariffs. The dynamic changes in tariffs have posed challenges for toy companies in strategic planning.
Jay Foreman, CEO of Basic Fun, didn’t accelerate shipments from China late last year, fearing the uncertainties surrounding Trump’s campaign mention of a possible 60% tariff. Foreman remarked, “Planning in such a chaotic environment increases the risk of missteps.” Presently, all of Basic Fun’s products, except for K’Nex developed in the U.S., are manufactured in China.
After the U.S. President’s decision to levy an additional 10% on Chinese goods, Foreman strived to collaborate with retailers to manage costs without burdening the customers. But with the recent tariff escalation, product prices will inevitably rise. For instance, the popular Tonka Classic Steel Mighty Dump Truck, previously sold at $29.99, is set to reach $39.99 by fall.
The Toy Association has been proactive, lobbying against the hefty tariffs on Chinese imports during Trump’s first term. Their stance remains firm, stressing to Congress that replicating China’s production expertise isn’t feasible. Ahearn emphasized China’s advanced craftsmanship, deeply embedded over generations, coupled with an incomparable skilled labor force.
Some toy firms are exploring alternatives to mitigate price hikes. For example, Steve Rad, CEO of Abacus Brands Inc., contemplated shifting operations to countries like Cambodia or Vietnam but recognized a lack of skilled labor. Consequently, Rad opted to manufacture Pixicade, a product that turns sketches into video games, in Texas, maintaining cost efficiency. This U.S. version is anticipated in stores by August.
While some toys remain too intricate for U.S. production, Rad is considering reducing feature costs. Meanwhile, Foreman intends to refresh existing toys with new designs or packaging to maintain their appeal. For example, his Mash’ems products might soon sport colorful new containers.
Toy suppliers, bracing for changes, have begun notifying retailers like Learning Express about imminent price increases. Richard Derr, who heads the firm’s Lake Zurich branch and its franchise council, remains skeptical, considering many suppliers previously pre-empted the tariffs by speeding up shipments.
Amidst these shifts, Derr, backed by fellow franchisees, is weighing alternative suppliers, emphasizing that most of his stock is new and not bound by past prices. He concluded, “We live in a time of rapid change. Planning can be complex, as today’s truth can quickly become tomorrow’s uncertainty.”
