Price of toys will increase due to Trump's tariffs on China, industry experts say
Pres. Trump touts tariffs during address to Congress
During President Donald Trump's address to Congress, he stated that there will be 'a little disturbance' when tariffs kick in and went on to say 'we're okay with that, it won't be much.' Lydia Mashburn Newman, the managing director of monetary economic at the American Institute for Economic Research joins LiveNOW's Andrew Craft and Austin Westfall to break it down.
WASHINGTON - Toys are expected to cost more by fall following President Donald Trump’s tariffs on China.
Industry experts say many toy makers are now renegotiating prices with retailers and taking a hard look at their products to see if they can cut costs.
Cost of toys to increase due to Trump’s tariffs on China
What they're saying:
Greg Ahearn, president and CEO of The Toy Association, said price increases of 15% to 20% are expected on games, dolls, cars and other toys by the back-to-school shopping season.
However, the price range that U.S. consumers are willing to pay is anywhere from $4.99 to $19.99, leaving little wiggle room to raise prices, he said.
FILE: Three girls look at shelves of toys. (Credit: Liz O. Baylen / Los Angeles Times via Getty Images )
"It’s untenable," Ahearn said, noting that small businesses make up roughly 96% of the American toy industry.
Majority of toys sold in US sourced from China
According to The Toy Association, nearly 80% of the toys sold in the U.S. are sourced from China.
Basic Fun CEO Jay Foreman said he didn't rush late last year to get shipments of Tonka trucks, Care Bears and other toys his Boca Raton, Florida-based company produces in China because he wasn't sure if the 60% tariff on Chinese goods that Trump discussed on the campaign trail would come to pass.
After Trump instead imposed an additional 10% tariff on Chinese goods last month, Foreman said he worked hard to persuade retailers to share some of the cost so he didn't have to pass it on to consumers. Now that the import duty has doubled, he said he will have to raise prices for many of his items.
For example, a Tonka Classic Steel Mighty Dump Truck, which now retails for $29.99, will likely go up to $39.99 as early as the fall, Foreman said.
Steve Rad, CEO of toy maker Abacus Brands Inc., said the company based in Austin, Texas, considered switching to factories in countries like Cambodia or Vietnam, but concluded they don’t have the same level of skills.
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However, Rad plans to start having one of its China-made products manufactured in the U.S. Abacus Brands found a Texas factory that said it could produce Pixicade, which converts doodles and drawings into playable video games, at no additional cost. The U.S.-made version is expected to be in stores by August, he said.
His other toys are more complex, Rad said, and he doesn’t see making them in the U.S. as feasible. Instead, he’s exploring whether he can lower costs by cutting some product features.
Trump puts 20% tariffs on products imported from China
The backstory:
Earlier this week, Trump officially doubled tariffs on Chinese imports to 20%.
Trump also moved forward this week with 25% tariffs on products imported from Canada and Mexico. On Thursday, Trump postponed 25% tariffs on most goods from Mexico for a month amid widespread fears of the impact of a broader trade war.
The Toy Association lobbied hard to exempt the toy industry from the 10-25% tariffs Trump levied on Chinese goods during his first term. The group lobbied again this time around, trying to educate members of Congress that toy companies can't replicate the expertise found in Chinese factories.