The looming threat of tariffs on toys continues.
Rebecca Mond, vice president of federal government affairs for The Toy Association, testified today at the U.S. Trade Representative’s (USTR) Special 301 Committee hearing regarding the proposed tariffs on approximately $300 billion in Chinese products. Mond’s testimony outlined the devastating impact that the tariffs would have on the U.S. toy industry and consumers, should they be enacted. The testimony detailed that these tariffs would be a further blow to an industry that is still recovering from losses stemming from the total liquidation of Toys “R” Us last year, directly resulting in the closure of approximately 800 stores, and more than 33,000 jobs — plus collateral losses spread across companies that sold to, or supported, operations.
“A 25% tariff applied to toys and games would result in the loss of an additional 68,014 U.S. jobs, a 10% reduction in the U.S. toy workforce, and $3.4 billion in lost wages,” Mond says. “Overall, tariffs on the toy industry would reduce the economic impact of the toy industry on the U.S. economy by approximately 10%, or $10.8 billion.”
The Toy Association formally requested the removal of the Harmonized Tariff Schedule (HTS) code 9503.00.000 (the tariff line under which all toys, as defined by customs, are classified) from the proposed list, as well as the removal of other toy related items, such as: children’s coloring books (4903.00.00), toy jewelry (7117.90.90), video game consoles (9504), and game machines (9504.90.40).
Mond’s testimony also detailed the unfeasible nature of moving current toy manufacturing out of China, given the efficiencies of the arrangement between U.S. toy companies and Chinese factories that allow the industry to provide American consumers with a broad array of fun and safe toys at competitive prices.
“For the industry as a whole and for the vast majority of the 3 billion toys sold in the U.S., the manufacturing infrastructure and capacity is simply not available in the U.S. or elsewhere around the world. Furthermore, consumers expect toys to be affordable. Toy manufacturing is too labor intensive to be a cost-effective option in the U.S.,” Mond says.
Additionally, the testimony highlighted concerns over safety and the potential uptick in IP theft should Chinese manufacturers begin selling on a direct-to-consumer basis.
The Toy Association recently joined several toymakers, alongside more than 600 American companies and trade associations, including Adventure Media and Events — the parent company of the Toy Book — in signing a letter to President Donald Trump with a clear message: Tariffs hurt the heartland.