‘We are absolutely in panic mode’: Toy makers prepare for Trump tariffs

The holiday season is usually a time of celebration for children in the United States, but this year it’s an anxious season for the country’s toy makers.

Most toys sold in the United States are made in China, and companies are worried they’ll get a lump of coal next year — in the form of high import taxes promised by President-elect Donald Trump.

That threat hung like a cloud over a trade show last month in Orlando, Fla., where toy sellers were already eyeing next year’s sales.

“Everyone was just talking about tariffs,” says Jay Foreman, CEO of Basic Fun!, a toy company based in Boca Raton, Florida. “We know that if tariffs are imposed, prices are going to go up and that’s going to affect the consumer. So we’re absolutely in panic mode in our industry.”

Foreman got his start in the toy business selling stuffed animals given away as prizes at many carnivals and beach walks.

“People really win,” he says. “I can tell you that because I made a career and a living selling this product.”

Made in China

When Foreman joined the industry in the mid-1980s, he recalls, the toys he sold were still made in Brooklyn, New York, by a largely undocumented workforce. However, production soon moved overseas, first to South Korea and then to China, which today dominates the global toy industry.

Foreman’s company sells a wide variety of toys, from trendy items based on the latest Marvel movie to classics like Lincoln Logs and Tinkertoys.

He fears that the 60% tariffs on Chinese-made goods, promised by Trump during the presidential campaign, will raise prices and reduce sales. Toy makers might absorb some of the costs, but most of it would be passed on to consumers.

“You’re going to see a $30 Tonka Mighty dump truck become a $45 Tonka Mighty dump truck,” Foreman says. “The prices of so many things consumers buy at places like Walmart, Target and Amazon are going to skyrocket.”

Uncertain times for toy manufacturers

Toy makers could try to avoid the highest tariffs by relocating their factories to other countries, but that’s no guarantee.

“What does that mean we all start moving our production from China to Vietnam, India and Mexico and then the administration makes a deal with China and now the target is on its back Vietnamese or on the backs of Indians and Mexicans,” says Foreman. “Of course, Mexico is in the sights.”

In late November, Trump threatened to impose 25% tariffs on imports from Mexico and Canada, two of the United States’ largest trading partners.

Trump does not always follow through on these threats. In 2019, he prepared to impose tariffs on toys, video games and cell phones from China, but backtracked, in part to avoid playing the Grinch and ruining the shopping season. holidays.

Toy makers could avoid tariffs altogether by manufacturing domestically. But Foreman says that in most cases it costs too much. And customers are generally not willing to pay the extra cost. He tried making Lincoln Logs in Maine, for example, but ultimately moved production back to China.

“We had a product on the shelf that said ‘Made in the USA’ and we had a product on the shelf from a competitor that was made in China,” Foreman says. “The consumer prefers to rely on value.”

Making sense of prices

Even toy makers who don’t rely on China aren’t sure how the tariffs will impact their businesses. American Plastic Toys, for example, still manufactures in the United States. Their toys are mostly made of molded plastic that doesn’t require a lot of labor. Toys also tend to be bulky, making them difficult to ship from overseas factories.

“We’re in a niche,” says company president John Gessert.

Having factories in Michigan also allows American Plastic Toys to deliver quickly, so retailers don’t run out of slides in the winter or buckets of sand in the summer.

“The worst thing you can do as a large retailer is have empty, unproductive storage space,” Gessert says. “We are here to fill the needs and we can respond quickly if necessary.”

A tax on imported toys could give Gessert’s company an advantage over foreign competitors — but he’s not counting on it.

“We’ve been making toys since 1962,” he says. “If we had designed a business model based on going rates, we wouldn’t have been in business this long.”

Basic Fun Foreman! While it might make sense for the United States to use tariffs to protect strategic industries like advanced computer chips, he doesn’t think Tonka trucks or Tinkertoys fall into that category.

“Be diligent, careful and selective about what you protect,” says Foreman. “Things like T-shirts and teddy bears and tennis shoes, we don’t need to make that stuff here.”

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