As the holiday shopping season quickly approaches, the U.S. toy industry is being dealt a harsh blow due to recent tariff policies. Almost 80% of the toy sold in the United States are produced in China. Continued flip-flopping over the future of these tariffs has seriously upended the production and pricing plans for many companies in this important sector. With Christmas less than 22 weeks away, retailers are continuing to face disruptions, rising costs, and even shortages of in-demand products.
The lack of clarity surrounding tariffs is creating absolute havoc among the toy community. Now, vendors from China and other places are inundating us with price increase notifications. For example, many of our businesses see wholesale cost increases of 10 – 20% due to these tariffs. This scenario throws a wrench in their plans for the end of the year. Yet despite these damaging trends, the tariff rate is now at its all-time low of just 12.5%. It still casts a long shadow across the industry, affecting stock levels, product offerings and prices paid by consumers.
Yet, we pride ourselves on being extremely consumer-friendly. At the same time, we’re tasked with keeping an incredibly complex and ever-growing product portfolio that can serve the broad wants of all of our customers which gets more daunting by the day. Smith remarked.
The U.S. toy industry traditionally peaks in production in April. This year, high tariffs on Chinese goods pushed production all the way to late May. That’s wrought havoc on the manufacturing activity of small- and medium-sized U.S. toy companies. By consequence, many retailers will be caught without the exact gift items customers want when they need them in November and December.
Mac Harman, CEO of a toy company, expressed frustration over the ongoing uncertainty: “The uncertainty has led us to spend all our time trying to rejigger what we’re ordering, where we’re bringing it in, when it’s going to get here.” He further highlighted the challenges posed by not knowing which items would be available for their catalog: “We don’t know which items we’re going to have to put in the catalog or not.”
The situation is particularly concerning for consumers. Gene Seroka, a logistics expert, explained that “for us consumers, lower inventory levels, fewer selections and higher prices are likely as we head into the holidays.” Manufacturers are doing their best to keep all kinds of products in stock, but face record inflation and volatile supply chain issues.
Schylling, known for its Needoh and Care Bear collectibles, has put a flat 20% increase on orders. The move was in response to tariff-related pressures on their whimsical playthings such as My Little Pony. With the holiday season approaching quickly, many companies are doing all they can to get their hands on the goods. At the same time, they need to contend with increasing costs.
Beyond just supply chain disruptions, for some brands it’s had them take a step back overall to re-evaluate their product line. Smith said he’d had to do away with half the items he usually orders. “In the end, I had to eliminate half of the products that I normally buy,” he stated candidly.
Even in light of these hurdles, many titans of industry believe they’ll be able to ride out the tempest. Harman emphasized his company’s commitment to creating joy during the holiday season: “Our purpose as a company is to create joy together, and we’re going to do our very best to do that this year.”
Nevertheless, the impact of tariffs on inventory and pricing may leave consumers with fewer options during one of the busiest shopping periods of the year. Retailers are beginning to adjust to this reality by finding products from other places, outside of China. This transition takes time and is not enough to fully offset the harms created by our existing tariff policies.
With the holiday order still coming in, and as industry experts have cautioned, companies need to be on constant watch to discern what’s happening with tariffs. With the threat of yet even more tariff hikes ever present, the landscape is more tailor than ever before.
In my opinion, we are the peak season push right now. Retailers have flooded in with imports in recent months to avoid the anticipated higher tariffs expected to take effect this summer. Seroka noted. The next few weeks are often the most important time of the year for retailers as they set their merchandise assortments.
