Toy Makers’ Stocks Plummet After Trump’s China Tariffs

Trouble in Toyland

There’s trouble in Toyland. Toy giants Mattel and Hasbro have seen their stocks battered by President Donald Trump’s escalated trade war with China.

The Impact on Toy Makers

On Friday, Mattel shares hit a new 52-week intraday low of $13.95 apiece, down 27% since Trump announced his aggressive and far-reaching "reciprocal tariff" policy last week. Shares of Rival Hasbro fell to a 52-week low of $49 on Wednesday, down more than 20% in the same time period.

Reliance on Chinese Supply Chains

The toy industry is heavily reliant on supply chains in China, leaving toy makers at the mercy of trade policy. Bank of America estimates that both Mattel and Hasbro source around 40% of their U.S. product from China.

Tariff Rates and Their Effects

Trump last week announced steep levies on imports from dozens of countries, hitting China with one of the highest tariff rates. On Wednesday, Trump lowered those rates for most countries to a blanket 10% tariff, except for China, which he hit even harder. The current U.S. tariff on Chinese imports stands at 145%. China has retaliated, imposing its own levy of 125% on American goods.

Margins and Price Hikes

Margins for toys are typically in the high single digits, meaning there’s little wiggle room for companies to absorb the cost of these new fees. Expectations are that toy companies will need to pass on the entire cost of Trump’s tariffs to the consumer through higher prices on the shelf. These price hikes, which could see some toy product double in cost, is set to coincide with this year’s back-to-school season.

Conclusion

The trade war between the U.S. and China is having a significant impact on the toy industry, with companies like Mattel and Hasbro seeing their stocks decline sharply. The reliance on Chinese supply chains and the high tariffs imposed by both countries are expected to lead to higher prices for consumers, which could have a negative impact on the industry as a whole.

FAQs

Q: How much of their U.S. product do Mattel and Hasbro source from China?

A: According to Bank of America, both Mattel and Hasbro source around 40% of their U.S. product from China.

Q: What is the current U.S. tariff on Chinese imports?

A: The current U.S. tariff on Chinese imports stands at 145%.

Q: How will the tariffs affect consumers?

A: The tariffs are expected to lead to higher prices for consumers, with some toy products potentially doubling in cost.

Q: When are the price hikes expected to occur?

A: The price hikes are expected to coincide with this year’s back-to-school season.