The toy aisle is set to become more costly.
This week, President Donald Trump escalated his trade war by implementing a 10% baseline tariff on nearly all countries, alongside significantly higher tariffs on several others. Among those facing increased tariffs are China and Vietnam — two nations critical to the U.S. toy industry.
For years, American toy companies have partnered with Chinese manufacturers to deliver the most sought-after action figures, dolls, and games to store shelves. Vietnam has also emerged as a key secondary market for businesses seeking to mitigate risks amid intensifying trade disputes between Washington and Beijing.
On Wednesday, Trump imposed an extra 34% duty on China, raising the total tax on imports from the country to 54%, and set a 46% tariff on Vietnam. This levy is significantly higher than toy companies anticipated and could result in substantial price increases for toys, according to industry analysts.
“Everyone is really in scramble mode,” said Greg Ahearn, president and CEO of The Toy Association, in an interview with CNBC. “This will have severe negative consequences for consumers and our industry.”
Compounding the issue, China announced on Friday that it would impose a retaliatory 34% tariff on all U.S. goods.
“I believe the situation with Vietnam will be somewhat easier to negotiate, as I expect the Vietnamese government will be more willing to engage in discussions than China in resolving any trade conflicts,” commented Curtis McGill, co-founder of Hey Buddy Hey Pal, the creator of the Eggmazing Egg Decorator, a crafting tool that allows children to color eggs with markers. “They can’t afford to lose much of this business.”
Approximately 77% of toys imported into the United States come from China, according to The Toy Association. Vietnam ranks third, following Mexico. Previously, Trump had imposed a 25% tariff on Mexican goods that do not meet the United States-Mexico-Canada Agreement standards.
Hasbro and Mattel, leading companies in the toy sector, both factored in a 20% tariff impact from China into their earnings forecasts for 2025 and had plans to relocate production to other countries such as Vietnam, Indonesia, and India, all of which also faced tariffs of 46%, 32%, and 26%, respectively.
“Consequently, relocating production may not be financially feasible,” stated Eric Handler, an analyst at Roth, in a research note issued to investors on Thursday. “Consumers should soon expect price increases to partially counterbalance the tariff impact.”
Hasbro and Mattel are scheduled to report first-quarter earnings this month, and Handler anticipates that both companies will lower their guidance.
Toy manufacturers have already faced significant declines on Wall Street following the tariff announcement. Mattel’s stock dropped over 16.5% in trading on Thursday, Hasbro saw a decline exceeding 12%, and Funko, which also has production facilities in China and Vietnam, experienced an 18% stock drop.
Handler believes companies will attempt to reduce costs through renegotiating contracts with manufacturers and possibly modifying packaging to enhance margins. However, it is clear that consumers will ultimately bear the weight of Trump’s tariffs.
“Price increases could range from 35% to potentially a direct 1-for-1 increase on products, depending on the profit margins of those items,” noted Ahearn of The Toy Association. “It could even reach a 50% increase, given the 54% tariff.”
Most toy profit margins are in the high single digits, which allows little room for companies to absorb these additional costs.
“There’s nowhere else for it to go but to the consumer,” Ahearn added, emphasizing that The Toy Association anticipates price increases aligning with this year’s back-to-school season.
“The greatest financial burden will fall on those who can least afford it,” he concluded.
