Amy Rutherford, the owner of a toy store in Virginia, recently mentioned that she had to significantly raise the price of her flagship toy, a plush panda, from $32 to $80. Now, no one is buying it. In Amy's store, almost all the toys sold are manufactured in China. Even those labeled Made in USA have parts sourced from the Asian giant.
Amy complained that with the 145% tariffs on Chinese imports imposed by Washington this year - raising the effective tariff rate to around 156% - her business is heading towards ruin because she cannot absorb the cost increase. "I don't have many alternatives because, even if I wanted to fill the entire store with toys made solely in the United States, I wouldn't find the variety I currently sell," she explained.
The trade war unleashed by Donald Trump is severely impacting toy stores in the US: 77% of toys sold in this country, according to official industry figures, are manufactured in China. Now, many of the popular toys that have always been affordable for American families have become luxury products.
Out of the over $17 billion in toys imported by the United States (excluding video games) last year, over $13 billion came from China, representing a 4.2% year-on-year increase. "Even during the previous trade war in Trump's first term, toys remained tariff-free. This is the first time this industry is directly affected," says Liang Mei, president of the China Toy and Juvenile Products Association (CTJPA).
"Christmas is in danger," declared Greg Ahearn from the US last week, president of the Toy Association. "Production in China is slowing down at the most inconvenient time. We are in the time of year when factories are running at full capacity to have products ready for the fall and winter shopping season." Industry giants like Mattel and Hasbro, which heavily rely on supply chains in China, saw their stocks plummet during Easter, hitting a 52-week low.
Chinese manufacturers are also distressed by the plummeting orders for the US market following the latest tariff onslaught from the Trump administration. The toy heartland of the world's largest exporter is in Chenghai, a former fishing village that, just 20 years ago, began opening small workshops where a few toys were manually manufactured with rudimentary machinery for the local market, using plastic from nearby recycling plants.
Chenghai, in southern China, developed this sector thanks to the industrial explosion in the Canton region and its strategic location with access to the South China Sea, a key passage in trade routes, right across from Taiwan and near the prosperous port of Hong Kong. Amid the years of openness in a China finalizing market reforms initiated by leader Deng Xiaoping, many entrepreneurs in the area saw an opportunity in the boom of electronic toys.
In the last decade, under current president Xi Jinping, Chenghai earned the title of the world's toy capital. Today, 12,000 manufacturers and over 130,000 workers operate in the epicenter of the world's largest toy market, where 30% of China's production is exported, a country that accounts for around 75% of global supply. In Spain, for example, seven out of ten toys bought during Christmas come from China.
In recent days, in the other giant of the continent, India, several analysts have highlighted the "golden opportunity" that New Delhi now has with the tariff war between Washington and Beijing to position itself as a new export hub for toys to the US market. "Indian toy exports have already been steadily increasing, going from $40 million in 2014 to an estimated $152 million last year," says Akshay Binjrajka, president of the Indian Toy Association.
"Relocating toy production out of China in the short term is not realistic. Many US retailers and importers have cultivated stable and trustworthy relationships with Chinese suppliers for decades," explains Liang Mei, referring to the fact that no other country, starting with emerging manufacturing centers like neighboring Vietnam and Cambodia, have the well-oiled Chinese production machine.
The Chinese government adopted a strategy many years ago to build an immense manufacturing chain for a single product around specific points in its vast geography. In the case of toys, Chenghai first established all the necessary conditions to develop the product, from cheap labor, bolstered by migrant workers from other regions of China, to a series of satellite industries (plastics, paints...) essential for toy manufacturing.
Despite the slowdown in the US market, Chinese toys continue to be shipped worldwide these days. However, over the weekend, The Wall Street Journal reported that the Trump Administration is trying to pressure over 70 trading partners to limit their commercial ties with China in exchange for tariff relief. This strategy aims to weaken Beijing's negotiating position before potential talks between Trump and Xi Jinping. On Monday, Chinese officials stated that Beijing would retaliate against any country that plays along with Trump's game and goes against Chinese interests.