Introduction

The toy industry in the United States faces significant financial pressures as new trade tariffs imposed by President Donald Trump are set to raise costs across the board. The latest round of duties has the potential to impact consumer prices for toys significantly.

New Tariffs Overview

This week, President Trump enacted a 10% baseline tariff on numerous goods from various countries, with particularly steep increases affecting imports from China and Vietnam—two key sources for toy manufacturing. According to The Toy Association, approximately 77% of toys brought into the U.S. originate from China, and Vietnam ranks as the third-largest exporter, just behind Mexico.

Details of Tariff Increases

In a significant escalation, the U.S. has added a 34% tariff on products from China, raising the total imposed to 54%, while Vietnam is subject to a 46% levy. These unexpected increases could lead to severe price hikes within the toy sector, according to industry experts.

Industry Reactions and Implications

Greg Ahearn, President and CEO of The Toy Association, remarked, “Everyone is really in scramble mode. This is going to have massive negative repercussions for the consumer and for our industry.” He emphasized that the financial burden from these tariffs will inevitably be passed down to consumers, especially impacting those with lower incomes.

Retaliation and Competitive Landscape

As a response to the newly imposed tariffs, China is poised to retaliate with a 34% levy on all U.S. exports. Industry insiders, such as Curtis McGill of Hey Buddy Hey Pal, anticipate that negotiations with Vietnam may be more manageable than with China, due to Vietnam’s reliance on U.S. business.

Financial Outlook for Major Toy Companies

Manufacturers like Hasbro and Mattel have preemptively incorporated a 20% tariff impact into their guidance for 2025. However, with additional tariffs placed on manufacturing in countries like Indonesia and India as well—at rates of 32% and 26%, respectively—the possibility of relocating production is less viable.

Eric Handler, an analyst at Roth, highlighted concerns that companies may not find feasible alternatives to offset these cost increases through adjustments in production or packaging.

Market Response and Price Projections

Following the announcement of the tariffs, shares of major toy companies like Mattel and Hasbro plummeted, with losses reported at over 16.5% and 12%, respectively. Experts predict that consumers may soon see price increases averaging between 35% to as high as 50% as companies attempt to cover the added costs from the tariffs.

Ahearn noted that most toy margins are already low, leaving little room for manufacturers to absorb the financial impact of tariffs without passing it along to customers.