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In the wake of tariffs reaching upwards of 145% on some Chinese goods, toy industry giant Mattel said it is considering raising prices.
This comes after President Donald Trump’s comment about kids needing fewer toys, during a time of year when many retailers are placing orders for winter holiday items.
UMKC supply chain economist Larry Wigger said while holiday gifts are not in jeopardy, prices will likely be inflated.
“There is a large chunk of people who are really getting hammered by inflation that are really going to be hurt by this,” Wigger said.
The Trump Administration is pushing for domestic production, but the cost of transferring business back to the United States is high.
Wigger said industry leaders weigh factors like the cost of labor, retooling, training, investment in technology, and reestablishing a supply chain before considering production moves that can take years to implement.
“The number one thing that managers and leaders in industry need when making decisions is stability for their expectations of the future. It doesn’t matter, tariff or no tariff. If we stick with it long-term, we can adjust to it. But it’s the chaos,” Wigger said. “When you don’t know. When you don’t have confidence in your expectations for the future, then the safest decision is not to invest. Don’t spend the money.”
Talks of potential trade deals with China don’t help the push for domestic production, according to Wigger.
“With this on-again, off-again, let’s make a deal approach to tariffs, you are not going to do it,” he said. “This isn’t about deals. This is about long-term industrial policy, and those two things don’t work together.”
Historically, toys have been at the center of global debates and wars. Germany’s dominance in toy manufacturing ended after WW1, which left space for the United States and others to create their own domestic production.
U.S. companies started searching for cheaper labor in the late 1960s and toy manufacturing has remained primarily overseas ever since.
“The manufacturing of toys is very dependent on the availability of materials, the availability of inexpensive labor, and what is happening politically and socially at the time,” said National Museum of Toys and Miniatures Curator Amy McKune.
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