Toy companies are worried about Trump's threat of steep tariffs

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It’s that time of year when children and their parents are busy hunting for the perfect holiday toy. But toy companies are already looking ahead to next year. They’re worried that, by then, Santa’s sleigh could be weighed down by tariffs. NPR’s Scott Horsley reports.

SCOTT HORSLEY, BYLINE: Jay Foreman sells trendy toys based on the latest Marvel movie or Instagram craze. His Boca Raton, Florida, company also sells classic toys that kids can bond over with their parents and grandparents.

JAY FOREMAN: We make Tonka trucks. We make Lite Brite. We make Lincoln Logs. We make Tinkertoys. Tinkertoys is, I believe, a 120-year-old brand.

HORSLEY: These days, nearly all of those toys are manufactured in China, like most of the toys sold in the United States. That has Foreman and his colleagues worried about President-elect Donald Trump’s threat to impose steep taxes on all imports from China. That threat hung like a cloud over a toymakers’ trade show in Orlando two weeks ago.

FOREMAN: All anybody was talking about were tariffs because we know that if tariffs hit that prices are going to go up, and it’s going to affect the consumer. And so we’re absolutely in panic mode in our industry.

HORSLEY: Toymakers might absorb some of the cost, Foreman says, but most will be passed on to shoppers. He suggests a Tonka mighty dump truck that sells for $30 today might cost $45 or more next Christmas, which would likely mean fewer sales. Toymakers could try to dodge the steepest tariffs by moving factories out of China, but Foreman says that’s no guarantee.

FOREMAN: What’s to say that we all start to move our production out of China into Vietnam and India and Mexico, and then the administration makes a deal with China. And now the target is on the back of the Vietnamese and the back of the Indians and the back of the Mexicans. For sure, Mexico is in the sights.

HORSLEY: Just last week, Trump threatened to impose a 25% tariff on imports from Mexico and Canada, two of the United States’ biggest trading partners. Trump doesn’t always deliver on those threats. Back in 2019, he was preparing to slap tariffs on toys, video games, and cellphones from China, but backed down, partly to avoid playing the Grinch and spoiling the holiday shopping season. A lot of businesses are taking a wait-and-see approach this time, in hopes that Trump’s latest tariff threat turns out to be a bluff.

JOHN GESSERT: I’m wondering if they’re just assuming that the Grinch narrative is going to again be applied to toys, but I don’t know. It’s a brave new world out there.

HORSLEY: That’s John Gessert, who runs American Plastic Toys, one of the few toy companies that still manufactures in the United States. Attacks on imports might give Gessert’s company an advantage over foreign rivals, but he’s not as enthusiastic as you might expect.

GESSERT: I mean, we’ve been making toys since 1962. So if we had designed a business model based on tariffs being in place, we wouldn’t have been in business this long.

HORSLEY: Gessert has built a business around molded plastic toys that don’t require a lot of labor. They tend to be bulky, which would make them hard to ship from overseas. And with factories in Michigan, Gessert can deliver quickly so retailers don’t miss out on seasonal demand.

GESSERT: If you don’t have snow goods in your store for that first snow, when people come in, they may buy that toboggan or that snow saucer someplace else, and you could lose ancillary sales.

HORSLEY: It’s doubtful, though, many other toymakers will bring factory jobs back to the United States. Jay Foreman, the Florida toymaker, has tried over the years making Lincoln Logs in Maine, for example, but it’s costly. And he says most toy customers aren’t willing to pay the price.

FOREMAN: We’ve had product on the shelf that says, made in the USA, and product on the shelf from a competitor that was made in China, and the consumer would rather go with the value. At the end of the day, the consumer goes with the value.

HORSLEY: Foreman says while it might make sense for the U.S. to protect strategic industries, like advanced computer chips, he doesn’t think Tonka trucks or Tinkertoys need that kind of protection.

FOREMAN: Things like T-shirts and teddy bears and tennis shoes - we don’t need to make that stuff here.

HORSLEY: Especially when many people say they voted for Trump out of concern over high prices. Scott Horsley, NPR News, Washington.

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