For one industry that relies heavily on imports from China, the toy industry in the United States is reeling as prices for playthings have risen at the fastest level on record since April.
Toy prices spiked by a record 2.2 percent in May from a month earlier. Compare that to May 2024 when prices saw a month over month drop of four-tenths of one percent.
In April, U.S. President Donald Trump raised tariffs on Chinese goods to 145 percent, and China retaliated with 125 percent tariffs on U.S. imports. The two sides in May agreed to lower their respective tariff rates by 115 percentage points after an initial round of trade talks in Geneva.
"They've gone from 10 percent to 20, 30, then 145. Now we're back to 30 from products coming out of China. The challenge is that this is a very low margin business. So the margins are tight. So how do you take a 30 percent tariff and apply that across a business where maybe you don't have 30 percent of margin. So there's a lot of gaming happening behind the scenes," said James Zahn, editor-in-chief of Toy Book, a U.S. publication.
According to Zahn, that "gaming" includes strategies to try and help mitigate higher import duties on Chinese manufactured toys.
"A lot of that comes down to you taking the cost of the tariff and spreading it out between the IP owner, then their manufacturing partner over in China, and then maybe a distributor, a retailer. And at the end of the day, whatever's left over, the consumers will pay that at what will be a higher price," he said.
The playtime politics are pinching key players: U.S. toy companies, Chinese manufacturers, some of whom halted or slowed production due to lack of demand, and American consumers - who ultimately bear the cost of any enforced price hikes.
To stay afloat, Zahn says some American businesses pivoted to help keep prices down by turning to products produced in the U.S., while others tried sourcing from countries like India or Vietnam to skirt exorbitant China import taxes. But increased costs aren't the only thing to be wary about. Inventory is also a concern.
"Restocks are an issue because things are volatile. We don't know if a toy becomes a big hit and the tariff rates, say, spike again. We don't know that a manufacturer is going to want to bring more of those in. And if they do, will it get here in time," he said.
US Toy industry bears brunt of tariffs amid rising cost
