From the Editor: Trump, Tariffs, Layoffs, & Price Hikes

Life in the business of play isn’t all fun and games, especially this year.

While those within the toy industry and its adjacent realms know this well, the majority on the outside, including consumers, politicians, and legislators, are not aware of the nuances of the business. As I said in my column opening this year’s edition of The BIG Toy Book, “You’d be hard-pressed to find another segment of the consumer products space that’s faced more challenges and fought more battles than the toy industry over the past decade.”

Still, with every challenge, the industry fights back and lives to play another day. Few remain unscathed, with many emerging battered and bruised but dusting themselves off to charge ahead. Sadly, there are casualties.

These challenges, and, at the risk of sounding like a broken record, bear repeating, especially for those, including President Donald J. Trump and members of his administration, who may not be familiar with the timeline: The closure of the original Toys “R” Us (2018), the China-U.S. Trade War (2019), the COVID-19 pandemic (2020-2023) the global supply chain crisis (2021-2022), and the subsequent inventory overload (2023-2024) preceded the volatility of today. This is an industry that has been absolutely hammered again and again.

And in 2025? Inflation is up. Consumer confidence is down. And, in the end, jobs will be lost.

At Toy Fair in New York earlier this month, tariffs were the topic of the moment. You couldn’t go more than a few minutes without someone mentioning the on-again-off-again “Trump tariffs,” especially when the biggest gathering in North America for the global play industry coincided with a new round against China — home to the industry’s largest manufacturing base — going into effect. During the show, numerous manufacturers stated that retail partners with open orders and signed contracts had “In as polite a manner as possible without threatening,” as one exec told me, began pressuring their vendor partners for new discounts to offset any tariff-related costs. According to The Wall Street Journal, the Chinese government called Walmart in for a sit-down after word of similar requests made it to Beijing last week. 

Tariff pressures emerged during earnings season when many senior-level toy industry executives used cautionary language in their quarterly reports. Still, some were — and still are — taking a “wait and see” approach, banking on the possibility that any escalation in the current trade war will be short-lived and reversed.

Others have added a “Tariff Surcharge” to invoices, including several specialty retail suppliers that have tacked 10% (or more) onto orders rather than adjusting individual prices.

Unlike some other industries, creating a “level playing field” is impossible when a business relies on a delicate, global balance between its players, one that’s been built on relationships cultivated over several decades. A blanket tariff, whether retaliatory or otherwise, does nothing more than punish American consumers and business owners while risking American jobs. 

If tariffs are intended to increase domestic goods purchases, the concept is noble, but the execution is not. The biggest factor that most people fail to understand is that you cannot simply flip a switch and restart production in the U.S. While that approach may work in the industrial world of steel and aluminum, as mills still exist in the U.S., there is no comparable manufacturing infrastructure here to meet the needs of the toy and game industries.

The “make it here” argument that politicians and pundits often tout isn’t realistic. Reshoring production can’t be done in days, weeks, or months. It would take billions of dollars of investment over many years to build new factories, source new machinery, and create the tooling necessary to do the job. Then, due to EPA regulations and other factors, there would still be complex issues regarding what can and can’t be manufactured in the U.S.

Tariffs may spur some reshoring, but they won’t create jobs in the way that some may think. Outside of some less complex toys, school supplies, activity sets, and large, bulk items like those made by the “plastics power trio” of Little Tikes, Step2, and Simplay3 in Ohio, most toys and games are made elsewhere, and those offshoring moves happened in the 1970s and ‘80s. 

While some manufacturing is expanding in the U.S., much of it is or will be automated. 

One big question during the last push for reshoring and nearshoring has surfaced again recently: Even if companies could afford to pay livable wages for a new manufacturing workforce, who would take these jobs? We’re decades removed from families living in factory towns that could bank on a long career in manufacturing.

If the administration aims to push production out of China, it might be working, but it might not be as designed. Companies including Hasbro, Mattel, Funko, and MGA Entertainment are moving production, but it’s going to places like Vietnam, Indonesia, and India. 

And for many “Made in USA” products, additional nuance comes into play if certain components are sourced from overseas. 

A key piece of the puzzle that often gets lost in the shuffle is that overseas manufacturing and American jobs go hand in hand. Even if you’re not in the toy industry, you’ve probably seen an Apple product that says, “Designed by Apple in California. Assembled in China.”

The same thing applies here.

The U.S. toy industry supports tens of thousands of American jobs, including inventors, designers, marketers, licensing agents, and more. This filters over to retailers, truckers, dock workers, warehouse staff, etc. By slapping tariffs on products manufactured overseas for U.S. companies, American jobs are at risk.

This week, Mattel filed a WARN notice in California detailing 120 job cuts at its El Segundo headquarters. Last year, the company took more office space in El Segundo, citing growth.

Additionally, reports of layoffs have surfaced from toymakers of all sizes, both public and private, including Funko and Jazwares.

A Jazwares spokesperson told The Toy Book: “Jazwares has reduced our company-wide headcount for the first time in its history. These organizational changes will further fuel Jazwares’ growth and enhance collaboration, allowing for greater operational efficiency. For all those who were impacted, Jazwares is grateful for their contributions and is committed to supporting them during this transition.”

While layoffs at some companies may have legitimate ties to tariff mitigation, there is concern within the industry that tariffs will be used as a convenient excuse for cost-cutting and downsizing, just as some used the COVID-19 pandemic — during which the industry experienced growth — to do the same.

The bottom line is that disrupting relationships overseas will have real consequences here at home. Products will become more expensive in a year when families are already squeezed to their limits. Fewer toys sold will result in lost sales, markdowns, and canceled orders. Small companies may be forced out of business while larger companies answering to Boards and shareholders will try spinning layoffs and closures into softer language like “workforce reductions” and “downsizing.” It’s a cycle we’ve seen play out before, but not with the level of sheer chaos that we’ve experienced in recent weeks.

I strongly believe in “America first,” and part of that comes down to the type of leadership displayed on a global scale. We need a thoughtful, measured approach that strengthens relationships at home and abroad for the toy industry and the greater good. 

This is a business built on putting smiles on faces, and that’s hard to do when the misguided actions of a few affect the many. Toys should be tariff-free.