As the Toy Fair unfolded over the weekend in New York City, toy creators, producers, and retail buyers assembled to discuss the latest trends for the upcoming holiday season. However, overshadowing discussions of popular toys was a significant concern regarding tariffs imposed on Chinese imports by President Donald Trump.
Trump had initially announced intentions to raise tariffs on Chinese goods to 20%, and by the conclusion of the Toy Fair, attendees were abuzz with the implications of this decision on toy pricing. With approximately 80% of toys in the U.S. imported from China, the ramifications were considerable for the industry.
Greg Ahearn, the president and CEO of The Toy Association, shared expectations of a 15% to 20% increase in toy prices, including games and dolls, as early as the back-to-school period. He emphasized the challenges this posed, considering that consumers typically tolerated prices within the $4.99 to $19.99 range, offering little flexibility.
Ahearn described the situation as untenable for the industry, particularly for small businesses which constitute 96% of the toy sector in the U.S.
The tariff situation became more complex as Trump also imposed new tariffs on goods from Canada and Mexico, although U.S. automakers were briefly exempted. The president then delayed tariffs on Mexican products, adding to the uncertainty for toy manufacturers.
Jay Foreman, CEO of Basic Fun, shared his cautious approach to navigating these challenges. His company, based in Florida, produces popular toys like Tonka trucks and Care Bears in China. Although uncertain about future tariffs, Foreman initially refrained from rushing shipments in the face of potential 60% tariffs that Trump had discussed.
After Trump levied an additional 10% tariff, Foreman managed to negotiate cost-sharing with retailers to prevent passing costs entirely onto consumers. Now, faced with doubled tariffs, he anticipates hikes in retail prices, such as the Tonka Classic Steel Mighty Dump Truck rising from $29.99 to $39.99.
The Toy Association persistently argued for exemption from impending tariffs, underscoring the critical expertise within Chinese manufacturing that was difficult to replicate elsewhere without substantial time and development.
Meanwhile, some companies explored alternative manufacturing locales. Steve Rad, CEO of Abacus Brands Inc., investigated factories in Cambodia and Vietnam but found the skill levels lacking. Interestingly, Rad planned to shift production of Pixicade, which transforms doodles into video games, to a Texas facility at no extra cost.
While exploring cost reduction by modifying product features, Basic Fun’s Foreman considered introducing new versions of his toys. For instance, changing packaging for Mash’ems, a collectible toy line, could provide a fresh look without significant changes.
Some toy stores have already started receiving notification of immediate price increases from distributors. Richard Derr, owner of a Learning Express store in Illinois and president of the Learning Express franchise council, expressed skepticism about these price hikes since many suppliers had accelerated shipments to avoid tariffs.
Derr and fellow franchisees are actively exploring alternatives to suppliers imposing sudden price increases. He remains optimistic, as a significant portion of the store’s offerings comprises new products, minimizing direct price comparisons with the previous year.
The rapidly shifting trade policies have placed toy businesses on high alert, prompting them to strategize swiftly in a volatile environment.
