Toy makers and stores are freezing holiday orders, according to the New York Times in an in-depth report. Shortages and higher prices are predicted. Some are consulting bankruptcy lawyers, fearing their firms won’t survive. Bottom line: President Trump’s China tariffs are threatening Christmas.
Toy makers, children’s shops and specialty retailers are pausing orders for the winter holidays as the import taxes cascade through supply chains. Factories in China produce nearly 80 percent of all toys and 90 percent of Christmas goods sold in America.
The production of toys, Christmas trees and decorations is usually in full swing by now. It takes four to five months to manufacture, package and ship products to the United States.
Mr. Trump’s 145 percent tariffs have caused a drastic markup in costs for American companies. Most of the entrepreneurs that have shared their plans with The New York Times have not yet cancelled their orders in the hope that the president will back away from the tariff brinkmanship.
Greg Ahearn, CEO of the US Toy Association that represents 850 toy manufacturers said: “We have a frozen supply chain that is putting Christmas at risk. If we don’t start production soon, there’s a high probability of a toy shortage this holiday season.”
For America’s Christmas industry, Chinese manufacturing is unmatched in its production speed and capability. Toy makers overhaul large portions of their product lines every year to adapt to the changing preferences of children. From materials to machinery, China’s factories are one-stop shops for importers.
Kara Dyer, founder of Storytime Toys, a maker of children’s books with playset puzzles, usually places a big holiday order with her Chinese factory in the first two weeks of April to have enough inventory by mid-July. The Christmas holidays account for about two-thirds of her annual revenue. She placed a small order of $30,000 worth of products before the latest tariffs, never expecting they would surge to such high levels. That shipment is en route to the United States. When it arrives, she said, she expects to owe $45,000 in tariffs. The shipment will provide the company with enough inventory for a few months, and she said she would probably raise prices at least 20 percent to cover the tariff costs. But she is waiting to make a big holiday purchase.
Kara Dyer said: “I’m going to hold out hope for another two weeks that the tariffs will be removed and I’ll be able to place the order. But if not, I will have to put my business on pause. I will definitely not place an order if the tariffs are in effect. It wouldn’t make any sense.”
In a Toy Association survey of 410 toy manufacturers with annual sales of less than $100 million, over 60 percent said they had cancelled orders, and around 50 percent said they would go out of business within weeks or months if the tariffs remained.
Greg Ahearn said he was in Washington last week to lobby for a 24-month reprieve, which could give companies time to find ways to make their products in the United States.
But even if President Trump grants importers temporary relief, significant disruptions will occur as companies rush to fulfill orders. Shipping costs are expected to surge, similar to the frenzy during the Covid pandemic, when a shortage of shipping containers led in some cases to a tenfold increase in freight prices.
