The threat of a 10% tariff on an additional $300 billion worth of Chinese goods on 1st September arrives at a difficult time for companies like Funko, Hasbro and Mattel as they ramp up for the all-important holiday season, where most of their business is done. There are contingency plans in place, but prices are inevitably set to spike.
“These measures, if they go through, will substantially impact American consumers, including their ability to gift quality toys to their children during the holidays,” Hasbro told CNBC Friday. “If the proposed tariffs are put in place, Hasbro will have no choice but to pass along the increased costs to our U.S. customers by pricing our products to address the tariffs.”
Hasbro said the industry is already facing serious headwinds from the bankruptcies of two major toy retailers and that the proposed tariffs “would be damaging to our industry and our company.”
The company hopes that toys will be excluded from the new set of tariffs Trump announced Thursday.
“The good news is that the tariff is only 10% and not 20% or 25%,” Linda Bolton Weiser, senior research analyst at Davidson, wrote in a research note Friday. “A product price increase of only 5% would be needed to keep gross profit dollars unchanged (although gross margin would decline). Demand for toys is fairly price elastic, and consumers react when key price points are breached.”
Head over to CNBC for the full report.