The U.S. toy industry is grappling with potential tariff increases on Chinese imports, which could surge to 145% under the Trump administration. This poses significant cost challenges, as 80% of toys in the U.S. are produced in China. However, industry leaders Mattel (MAT) and Hasbro (HAS, Financial) are positioned to leverage their supply chain advantages to capture greater market share from competitors.
Mattel currently manufactures 20% of its products in China and aims to reduce this to 10% by 2027 by shifting production to Vietnam and Mexico and optimizing pricing strategies. The company anticipates an additional $270 million in costs by 2025 due to tariffs. Meanwhile, Hasbro, with 50% of its production in China, plans to decrease this to below 40% by 2026 through product line adjustments, supply chain diversification, and cost reductions. Hasbro expects tariff-related costs to rise by $300 million but could mitigate this to $180 million.
Both companies are implementing price increases and production shifts to offset tariff impacts. Mattel, for instance, plans to absorb 70% of the tariff impact through these strategies. Retailers are reportedly reserving shelf space for these giants, potentially squeezing out smaller brands. Analysts warn that smaller toy manufacturers might exit the market due to rising costs, leaving Mattel and Hasbro to fill the void.
