President-elect Donald Trump promises to strike new rates on imports after he is inaugurated next month – a vow that is prompting the toy industry to warn of the consequences.
Even when toys are designed in Europe or the US, they are often manufactured in China, a country Trump exported from last month threatened to target with a new rate of 10% once he takes office. On the campaign trail, he floated the idea of a tariff of up to 60% on all Chinese goods. Nearly 80% of U.S. toys are manufactured in China, according to The Toy Association, an industry group.
If Trump implements his tariff plan, toy prices will likely increase “immediately,” Jennifer Bergman, the owner of West Side Kids in New York City, told CBS News. She estimates that about 90% of the toys she sells are made in China.
It’s fair to say that the toy industry isn’t the only one concerned about the impact of Trump’s promised tariffs. Higher prices for a wide range of imports would likely passed on to the consumer. After serving the neighborhood for more than four decades, Bergman fears that higher prices could jeopardize her store’s survival and impact her customers.
“It would be heartbreaking,” she said. “It would be a real loss for the community. It would be a real loss for me. I can’t imagine not being here anymore.”
If Trump follows through with his tariff plans, American consumers will lose as much as $78 billion in purchasing power annually on products including clothing, toys, furniture, appliances, shoes and travel items, according to the National Retail Federation. declared in findings released last month.
The toy industry is also sounding the alarm, with the Toy Association calling the potential tariffs “significantly harmful” and urging its members to contact their congressional delegates to express their concerns.
Tariffs are essentially a tax on imports, but instead of being paid by the exporting country or company, the duty is paid by the importer – and much of that is passed on to consumers in the form of higher prices.
“A 60% tariff on China would be a major shock to international commodity markets,” experts at the Peterson Institute for International Economics wrote in a Dec. 12 blog post.
The toy industry would be among the U.S. industries to face the worst impact because China is the dominant supplier to the U.S., she added.
“While toys appear to be products for which substitute sellers would be readily available, China maintains a dominant position in toy manufacturing for several reasons, including its not easily reproduced ability to produce materials that meet U.S. product safety standards,” they noted.
Still, some economists say Trump could use the threat of tariffs as a negotiating tool without actually imposing the tariffs. And tariffs could also encourage greater U.S. production of toys and other products, though it would likely take some time for new factories to come on stream.
