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Challenges in the Toy Industry Amid U.S.-China Trade Tensions
Toy manufacturers, including industry leaders Mattel and Hasbro, are facing significant challenges due to increasing trade tensions between the United States and China.
Recently, Mattel’s stock plummeted to a new low, falling to $13.95 per share, representing a 27% decline since President Trump’s announcement of a robust “reciprocal tariff” strategy designed to address trade imbalances. Similarly, Hasbro’s shares dropped to a 52-week low of $49, reflecting a more than 20% decrease within the same timeline.
The toy sector is significantly dependent on imports from China, which has placed companies in a vulnerable position as the trade policies shift. According to estimates from Bank of America, both Mattel and Hasbro derive about 40% of their U.S. products from Chinese manufacturing.
In a recent development, President Trump introduced substantial tariffs on imports from various nations, targeting China with particularly steep rates. Although he later adjusted these tariffs to a more uniform 10% for most countries, China continues to face heightened tariffs. Currently, the U.S. imposes a hefty 145% tariff on goods from China, while in response, China has enacted a 125% tariff on American exports.
The profit margins in the toy industry are typically narrow, often in the range of high single digits, which limits companies’ abilities to absorb the costs associated with the new tariffs. Analysts predict that these increased costs will compel toy companies to raise retail prices, potentially leading to significant price hikes on various toy products. This situation is especially concerning as it coincides with the back-to-school shopping season, when demand for toys and school supplies peaks.
This evolving landscape poses serious questions about the future of toy pricing and accessibility, as consumers may face rising costs during a crucial shopping season.
— CNBC’s Tom Rotunno contributed to this report.
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