Trump tariffs ‘will impact the entire toy industry,’ Mattel says

Plastic made Barbie figures of U.S. toy manufacturer Mattel are seen inside a basket at a children’s indoor playing area in Hanau near FrankfurtThomson Reuters

• The toy maker Mattel warned Friday that President Donald Trump’s tariffs “will impact the entire toy industry.”
• Industry toys are not on Trump’s tariff lists yet, but some raw materials are.
• The company reported third-quarter earnings that missed on both the top and bottom lines.
• Watch Mattel trade live here.

Mattel, the second-largest toymaker behind Hasbro, warned Friday that President Donald Trump’s tariffs against China will hurt the toy industry.

“This is something that will impact the entire toy industry,” Ynon Kreiz, CEO of Mattel told investors during his company’s third-quarter earnings call on Friday.

“The Toy Industry Association of America reported recently that 85% of all toys sold in the US are imported from China. In our case, it is actually less than two-thirds, so we are somewhat in a better position.”

The Trump administration in March initiated a trade war against China by announcing plans to post a 25% tariff on $50 billion worth of Chinese goods. Trump later announced another 10% duty on $200 billion worth of import goods from China in September and threatened to impose third-round tariffs on another $267 billion Chinese goods.

As of Friday, the first two rounds have taken effect and individual toys are not yet on the list of tariffs so far, but some raw materials are, such as lithium batteries and chemicals that make Silly Putty. Moreover, the third round of tariffs would probably include finished toys. 

“With China supplying the vast majority of these juvenile products and with no alternative manufacturing capacity readily available elsewhere, tariffs on these juvenile products will result in higher prices and fewer choices for U.S. consumers,” Corinne Murat, director of government affairs at Mattel, wrote in a public letter to the Office of the United States Trade Representative (USTR) in late August.

Mattel reported third-quarter earnings late Thursday that fell short of Wall Street expectations. Mattel earned an adjusted $0.18 a share on revenue of $1.44 billion, missing the $0.15 and $1.5 billion that analysts surveyed by Bloomberg were looking for. 

The company also said gross sales fell 6%, primarily due to a negative 3% impact from the Toys R Us bankruptcy filed last year and a negative 3% impact from the slowdown in its China business.

If anything sounds encouraging, it’s that the toymaker has one advantage over the competition — the majority of its Hot Wheels and Barbie products are not manufactured in China. Gross sales in North America were up 6%, marking the highest sales growth in 11 quarters, driven by strong Barbie sales.

Mattel was down 2.5% following Friday’s earnings call and 15% this year.

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