America’s toymakers outsourced manufacturing to China in the 1980s to cut costs. Nearly half a century later, that decision could bankrupt them.
Almost half of the more than 400 US companies surveyed by the Toy Association, a trade organization, said that President Donald Trump’s 145% tariffs on goods imported from China implemented in April will put them out of business within months.
Roughly 80% of toys sold in the US are made in China, according to the organization. American toymakers that can’t afford to absorb the higher costs will either attempt to push higher prices onto consumers or stop making their products altogether, which could imperil the crucial holiday shopping season.
“There’s no magic wallet that’s going to pay for it,” John Kimble, the chief financial officer of Jakks Pacific Inc., a Santa Monica, California-based toymaker said on a conference call Tuesday. “Our industry has already seen too many factories, wholesalers and retailers go bankrupt over the past 10 years.”
Kimble traveled to China with Jakks Chief Executive Officer Steve Berman recently to meet with local manufacturers the company has worked with for decades to discuss how to cut costs, he said. The maker of Disney Princess dolls and Sonic the Hedgehog collectibles is stockpiling inventory in the US, reviewing what products it will sell in the future and seeking to lower expenses across its business.
Trump’s tariffs are hobbling an industry already contending with a slowdown in sales after a surge during the pandemic’s lockdowns. Revenue in the US was flat last year after declining 7% in 2023, the Toy Association said in January. Last week, the administration was sued by a group of companies, including toymakers, that allege the tariffs are unconstitutional.
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