Tariffs Won't Bring Toymaking Jobs to the U.S., but They Might Kill Toymaking Jobs Already Here
Tariffs on aluminum, silicone, and dyes are already causing pain for toymakers, and the prospect of additional tariffs is anything but fun and games.
American toymakers say the latest round of tariffs aimed at Chinese-made goods will hike prices for consumers and are likely to trigger job losses across the industry. Meanwhile, the tariffs won't achieve their primary goal of bringing manufacturing jobs back to the United States.
"We are not aware of any toy company that has indicated that the tariffs would result in U.S. manufacturing becoming a viable option," Steve Pasierb, president of The Toy Association, an industry group, told the Office of the U.S. Trade Representative in a letter last month. Toy manufacturing is too labor intensive to be cost-effective in the United States, he said. And there isn't sufficient infrastructure or manufacturing capacity in the U.S. either.
Much like cell phones, computers, and other more advanced "toys," most children's toys sold in the United States are not made in any one country but are produced by complex global supply chains that President Donald Trump's tariffs aim to upend. According to the Toy Association, Americans purchase more than $27 billion worth of toys each year—accounting for about a third of global toy sales. While about 85 percent of American-sold toys are manufactured in China, 80 percent of the purchase price of the average toy remains in the United States because toymakers do research, development, design, and testing in America.
So far, toys imported from China have not been targeted by the Trump administration's tariffs. But groups like the Toy Association are worried that the president may follow through with threats to impose more tariffs aimed at Chinese-made goods beyond the $200 billion in imports already subject to new taxes—something Trump has repeatedly threatened to do. Other items commonly made by the same companies that produce toys, including children's furniture, arts and crafts items, and some children's clothing, are already subject to tariffs.
Even without an additional hit from tariffs, the American toy industry is in some trouble. Mattel, one of the biggest American toymakers, recently announced plans to lay off 2,200 workers. That move was tied to the bankruptcy of Toys 'R' Us earlier this year.
If toymakers respond to tariffs by shifting production out of China, it won't be to the United States. And it won't happen quickly.
"There is absolutely no way that Hasbro and Mattel can shift from China to another low-cost country overnight," Lutz Mueller, CEO of the logistics firm Klosters Trading, told CNN on Sunday. "They don't have the infrastructure or supply chain in place."
While tariffs are unlikely to cause major toymakers to shift supply chains in order to manufacture more toys in the United States, they are also causing economic pain for toymakers that are already do make toys here.
"It's going to cost us into the six figures this year in extra costs," Aaron Muderick, CEO of Crazy Aaron's Puttyworld, told CNBC last month. Trump's tariffs on silicone, aluminum, and dyes have increased costs for the suburban Philadelphia putty-maker, which employs about 85 people. Muderick said his company made the decision to disrupt its typical supply chain in order to "stock up" on silicone before anticipated price increases hit after the tariffs took effect. When that supply runs out, he's worried about the blow the company could take.
"We've already locked in prices with retailers for next year with many of our products," he said. "It's going to be very difficult for us, because the margins just keep getting tighter and tighter."