Brace yourselves, toy makers. The cost of toys is on the rise.
Nearly 80% of the toys sold in the United States are sourced from China. On Tuesday, President Donald Trump increased the extra tariff he put on all Chinese imports to 20%.
Tariffs are taxes a country places on products imported from other nations. Why increase those fees? The President believes the United States will make money this way from imported products. He also believes the action will boost the U.S. economy: When foreign products become more expensive due to tariffs, that should motivate Americans to make those same products at lower prices.
Many toy makers are now renegotiating prices with retailers. They’re taking a hard look at their products to see if they can cut costs.
Greg Ahearn is the president and CEO of The Toy Association. He says increases of 15% to 20% are expected on games, dolls, cars, and other toys by the back-to-school shopping season.
Ahearn says the price range that U.S. consumers are usually willing to pay for toys is anywhere from $4.99 to $19.99. He notes that leaves little wiggle room to raise prices.
Basic Fun! is a global designer and marketer of toys. Its products include classics like Care Bears, Lincoln Logs, Tinker Toys, and Lite Brite. CEO Jay Foreman has had a hard time planning for increased expenses.
While President Trump was on the campaign trail, he spoke of a 60% tariff on Chinese goods. The President shifted to 10%, and then suggested another 10% last month.
Foreman says he worked hard to persuade retailers to share some of the cost. He didn’t want to pass all of the extra expense to consumers. Now that the import duty is 20%, he says he will have to raise prices for many of the products his company sells.
For example, a Tonka Classic Steel Mighty Dump Truck now retails for $29.99. It will likely go up to $39.99 as early as the fall.
Will toy making come back to America as a response to the increases? Ahearn says the highly skilled and lower cost labor force in China is not available in the States. That makes immediate relief on toy prices unlikely.
Steve Rad is CEO of toy maker Abacus Brands Inc. His company looked into having factories in countries like Cambodia or Vietnam. But his team concluded those places don’t offer the same level of skills as China.
Rad does plan to have one product shift to a Texas factory. Pixicade is a kit of markers and stickers. After drawing doodles with the markers, a downloadable app turns the pictures into playable video games. Rad says a U.S.-made version of the kit is expected to be in stores by April.
China has pushed back against U.S. tariffs. It countered with additional 15% duties on U.S. imports including chicken, pork, soy, and beef. It expanded controls on doing business with key U.S. companies.
“If war is what the U.S. wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end,” China’s embassy to the United States posted on social media.
President Trump argues other countries have had high tariffs on American goods for years. He believes increased tariffs will inspire more companies to bring manufacturing back to the United States.
“One’s life does not consist in the abundance of his possessions.” — Luke 12:15
