Mattel's CEO openly discusses price hikes, advocating for tariff-free imports of playthings.
Updated Article:
Hey there, folks! Last week, President Trump hinted at an escalating trade war might bump up the price of kids' toys by a couple of bucks. Looks like that prediction is becoming a reality.
Mattel, the brains behind Barbie, announced plans this week to jack up the price of American toys thanks to tariffs. According to their financial report on Monday, those pesky tariffs haven't affected their earnings for the first quarter of the year. To steer clear of future losses, Mattel is expanding their production base outside of China and making some pricing adjustments in their US business - Wall Street lingo for "we're raising prices."
This tariff situation is slamming the toy industry hard. almost 80% of the toys sold in the US are manufactured in China, as reported by The Toy Association. Mattel's Chief Financial Officer, Anthony DiSilvestro, said on Monday that the current tariffs will cost them around $270 million this year, and that's before they even consider taking any mitigating action.
Prices are already on the rise. According to Telsey Advisory Group's product pricing analysis, a Barbie doll with a swimsuit sold at Target jumped 42.9% over a week in mid-April to $14.99 - making it one of the largest price hikes the consumer research firm tracked.
Chief Executive Ynon Kreiz told investors on Monday that under the current conditions, he expects around 40-50% of their products to stay priced at $20 or less. However, he strongly advocates for zero tariffs on toys and games globally.
"Zero tariffs for toys gives the greatest number of children and families access to play," he said.
Mattel sources products from seven different countries, Kreiz noted in February. He anticipates China will represent less than 40% of global production for their toys in 2025, half the industry average. He aims to reduce US imports from China to less than 15% in 2026 and less than 10% by 2027. On Monday, Kreiz announced that they will shift production of 500 toys from China to other countries.
However, that production won't be relocating to the US. Kreiz told CNBC Tuesday that even if tariffs on toys remain, it would still be cheaper to manufacture toys outside the US.
"We believe that production in other countries where we can be efficient and more productive is the best balance between manufacturing outside of the US and continuing to develop product in terms of design and creativity in America," Kreiz said.
Mattel has also joined the ranks of companies that have paused their full-year 2025 guidance due to uncertainty in predicting consumer spending, particularly during the holiday season. This move often signals significant volatility, hoping investors and analysts scurry away from such uncertainty like cockroaches from a flicked light.
Oh, and here's a bit of interesting trivia: nearly half of American small- and medium-sized toy companies are facing increased costs and supply chain disruptions, putting them at risk of closure due to those tariffs[1]. Keep those toys coming, folks!
CNN's Elisabeth Buchwald contributed to this report.
Note: The tariffs have affected smaller toy companies disproportionately, with about 96% of American toy companies – fitting the "small- and medium-sized" definition - being at risk of closure due to the tariffs, as they face increased costs and supply chain disruptions[1]. These tariffs have led to a freeze in the toy production supply chain, resulting in canceled orders, potential loan defaults, and bankruptcies. This not only affects the companies but also puts high-paying jobs in the US at risk[1]. Despite most toy production happening outside the US, over 700,000 jobs in the US are involved in design, marketing, innovation, and creation of toys. These jobs are vulnerable due to the tariffs[1]. Companies like Hasbro have endorsed efforts by The Toy Association to advocate for zero tariffs on toys and games to mitigate these effects[1].
- The toy industry is facing a heavy blow due to the tariffs, as 80% of toys sold in the US are manufactured in China.
- Mattel, the company behind Barbie, announced plans to increase the price of American toys due to these tariffs, with their Chief Financial Officer estimating a cost of around $270 million this year.
- The tariff situation is impacting small- and medium-sized toy companies disproportionately, with nearly half at risk of closure due to increased costs and supply chain disruptions.
- In 2025, Mattel aims to reduce US imports from China to less than 15%, and less than 10% by 2027, sourcing products from seven different countries instead.
- The tariff issue has led to volatility in the stock market, as companies like Mattel have paused their full-year 2025 guidance due to uncertainty in predicting consumer spending, particularly during the holiday season.
- In the world of finance and business, politics plays a significant role, as evidenced by the impact of tariffs on industries like toys and the subsequent policy-and-legislation efforts to address them.
- General news outlets, like CNN, continue to report on war-and-conflicts, crime-and-justice, and the economy, including the effects of tariffs on specific industries and the job market.
