The toy hall is about to be more expensive.
President Donald Trump expanded his commercial war this week, placing a 10% reference tariff in almost all countries and levies much more steep in dozens of others. Among those beaten with higher rates were China and Vietnam, two nations that are vital for the national toy industry.
For decades, American toy companies have worked with Chinese manufacturers to take action figures, dolls and more popular games to retail shelves. Vietnam became a solid secondary market for companies that seek to diversify their factory locations in the midst of growing commercial tensions between Washington and Beijing.
Trump slapped China with an additional service of 34%on Wednesday, which brought the total tax of the nation to 54%, and hit Vietnam with a 46%rate. The tax is much higher than toy companies expected and could lead to massive price increases in toys, industry experts said.
“Everyone is really in Scrable mode,” said Greg Ahearn, president and CEO of the toys association, CNBC. “This will have massive negative repercussions for the consumer and for our industry.”
In addition to tensions, China imposes a 34% retaliation tax on all US products, announced its Ministry of Commerce on Friday.
“I think that Vietnam’s situation will be a bit easier to negotiate, so I think we will see that the Vietnamese country and the government come to the table faster than China trying to solve any commercial dispute,” said Curtis McGill, co -founder of Hey Buddy Hey Pal, which makes the Eggmazing egg decorator, a tool for creating egg To color them. “They simply are not in a place where they can be losing much of the business.”
About 77% of imported toys to the United States come from China, according to data association. Vietnam is third, just behind Mexico. Trump previously placed a 25% tariff on Mexico’s assets that do not comply with the United States-México-Canadá agreement.
Hasbro and MateThe leaders in the toy space, both incorporated a tariff impact of 20% of China on their orientation projections by 2025 and had strategies to change production to other countries, such as Vietnam, Indonesia and India, which were also affected by tariffs: 46%, 32% and 26%, respectively.
“As a result, relocating production may not be financially viable,” Eric Handler, a Roth analyst, wrote in a research note for investors published on Thursday. “The consumer should soon see price increases to partially compensate for the tariff impact.”
Hasbro and Mattel report the profits of the first quarter this month, and Handler said that investors will probably see guidance cuts from both companies.
The toy companies have already been beaten on Wall Street following the tariff announcement. Mattel’s actions fell more than 16.5% in Thursday’s negotiation, Hasbro lost more than 12% and Funkothat it also has manufacturing in China and Vietnam, saw that its actions are straws of 18%.
While Handler hopes that companies try to reduce costs through contractual renegotiations with manufacturers and, perhaps, altering the packaging to improve margins, said there are little doubt that consumers will assume the worst part of Trump’s duties.
“It could have from 35% to potentially a timely price increase in products, depending on the margin in which these products work,” Ahearn of the toys association said. “Actually, it can be an increase in the price of 50%, since it is a 54%rate.”
Most toy banks are in the high digits, he said. Therefore, there is very little room for maneuver for companies to absorb these rates.
“There is no place to go, but for the consumer,” said Ahearn, and pointed out that the toys association expects price increases to coincide with the season of return to this year’s school.
“The greatest budgetary impact is people, unfortunately, they can pay less,” he said.
