Mattel Pushes Back on Tariff Goals: No Plans to Bring Toy Manufacturing to U.S.

One of the goals of President Donald Trump’s 145% tariffs against China is to drive manufacturing back to America. But the odds of that are low, at least when it comes to toys.

The View from Mattel

“We don’t see that happening,” Mattel CEO Ynon Kreiz said on CNBC’s “Squawk Box” on Tuesday, less than a day after the company withdrew annual financial targets. “We need to remember that a significant part of toy creation happens in America,” he said. “Design, development, product engineering, brand management all happens in America. Making product, producing product in other countries, allows us to create quality products at affordable price points.”

Diversification of Manufacturing

Mattel has been diversifying its global manufacturing for nearly a decade in an effort to reduce its dependence on China. By the end of the year, less than 40% of Mattel’s product will be sourced from the country. Kreiz noted that in two years, no country will represent more than 25% of Mattel’s sourcing.

Mitigating the Effects of Tariffs

In the meantime, Mattel is taking mitigating actions to fully offset costs associated with Trump’s trade war with China, including raising prices in the U.S., while aiming to keep the cost of many toys low. The company is expecting to keep between 40% and 50% of its products under $20. “This is something we are committed to do,” Kreiz said. “To continue to create quality product and find the right balance of price and value all in the service of the consumer.”

Market Impact

Since the tariffs were announced on April 2, Mattel’s stock is down about 19%.

Conclusion

In conclusion, while the tariffs imposed by President Trump aim to drive manufacturing back to the United States, companies like Mattel do not foresee a significant shift in their manufacturing base. Instead, they are diversifying their global manufacturing and taking steps to mitigate the effects of the tariffs, aiming to maintain affordable prices for consumers.

FAQs

Q: What is the goal of President Trump’s tariffs against China?

A: One of the goals is to drive manufacturing back to America.

Q: Does Mattel expect manufacturing to return to the US?

A: No, Mattel does not see that happening, citing the need for affordable price points and the fact that significant parts of toy creation already happen in America.

Q: How is Mattel responding to the tariffs?

A: Mattel is diversifying its global manufacturing, raising prices in the US, and aiming to keep many toys under $20 to mitigate the effects of the tariffs.

Q: How has Mattel’s stock been affected by the tariffs?

A: Mattel’s stock is down about 19% since the tariffs were announced on April 2.