With the Christmas shopping season quickly approaching, many retailers have been worrying about President Trump's proposed tariffs on China and how they will affect sales this season. With this in mind, earlier this month President Trump decided to delay the imposition of tariffs on certain Chinese-made goods from September 1 to December 15, hoping to keep the prices of many items people gift low for the holiday season. But will this actually save the Christmas shopping season?
Opinions are mixed. While toys are one of the items that will not see a tariff increase this holiday season, not all toy manufacturers are jumping for joy.
Isaac Larian, who is the founder and CEO of MGA Entertainment, says that his company is unsure how to proceed this season because of President Trump's unpredictability when it comes to tariffs. He accuses the president of going back and forth in regards to both the imposition of tariffs as well as to the tariff amounts. So, to him it is unclear at the moment what kind of tariff policy will actually be in place this season.
Larian further says that he sees the delay in imposing the tariffs as nothing more than a band-aid on the problem. He adds that he only hopes that the president does not change his mind between now and Christmas, but even if does not change his mind, the future is still unclear.
According to ITI Manufacturing, China makes around 80% of all toys sold across the world, with the United States being its leading customer. The Toy Association says that the profit margins for many of its members is as low as pennies on the dollar. So, there is not much profit to be made on a $10 toy, which the association says is the typical retail price of a toy in the United States.
Larian, who indicates that China makes around 75% of the products that his company sells, says that toy purchasers are very price conscious. He insists that while he can sell 100,000 units of a toy selling for $10, he might only be able to sell 25,000 units of a toy selling for $12. So, even a small tariff can have a big impact on his bottom line.
While Larian says that he cannot move his toy production to another country, toy giant Hasbro is doing just this, by shifting production from China to Vietnam and India. Right now, about 67% of the company's products are made in China, but by next year they hope to reduce this by 50%.
As for this holiday shopping season, not all toy manufacturers share Larian's pessimism about the tariff delay. The Toy Association, for example, believes that it has indeed saved the Christmas shopping season. Hasbro has even publicly thanked the president for both listening to them and acting upon their needs.