The normally lively atmosphere at the North American Toy Fair was dampened this year as toy manufacturers grappled with the fallout from U.S. President Donald Trump’s escalating trade war. The recent tariff hikes on Chinese imports, along with new duties on goods from Mexico and Canada, have sent shockwaves through the industry, leaving businesses scrambling to absorb the increased costs.
In February, Trump raised tariffs on products made in China by 10%, but last week, with little warning, he announced an additional 10% border tax, which took effect on Tuesday. Given that approximately 80% of toys sold in the U.S. are made in China, the sudden 20% increase in costs has left many toymakers reeling.
Toymakers Sound the Alarm
“It’s the first thing we talk about and the last thing we talk about,” said Jay Foreman, CEO of Basic Fun!, from his booth at the Toy Fair. His company, which produces 90% of its products in China, had initially planned to manage the 10% tariff increase by raising prices and accepting lower profit margins. However, Trump’s surprise second hike forced him to scrap his strategy overnight.
Foreman now expects to raise prices on many of his toys by at least 10% later this year. “The reality is that tariffs will raise the cost of toys for consumers,” he said. “If a customer says, ‘Then I can’t buy it,’ then I can’t sell it, because I can’t produce to lose money.”
Widespread Business Uncertainty
The toy industry is just one of many sectors now feeling the squeeze. During Trump’s first term, tariffs primarily targeted Chinese industrial goods, sparing consumer products like toys. But this latest move expands duties across the board, affecting nearly 15% of all U.S. imports annually.
The average tariff rate on Chinese imports has now surged to approximately 34%, nearly double the highest level seen during Trump’s first presidency, according to Goldman Sachs estimates.
Yaron Barlev, Chief Operating Officer of Clixo, a Brooklyn-based toy startup, described the situation as a major disruption. Clixo, which recently secured a deal with Target for 2025, now faces unexpected financial strain as its China-based manufacturing ramps up to meet the order.
“10%—it’s something we can somehow live with. 20% is a different ball game,” Barlev said, adding that the unpredictability of Trump’s trade policies makes it difficult to plan ahead.
Industry Pushes Back
The Toy Association, a lobbying group representing toy companies, is now appealing to the White House and Congress for an exemption, warning that price hikes on toys will hit consumers already struggling with inflation.
“We think we have a very strong case to make and we’re hoping they’re going to be open to listening,” said the association’s president, Greg Ahearn. He emphasized that most toy companies are small businesses with razor-thin profit margins that may not survive these tariff increases.
Despite Trump’s assertion that tariffs will incentivize U.S. manufacturing, many in the toy industry argue that producing domestically is not financially viable. Clixo had initially explored U.S.-based manufacturing, but high costs and limited infrastructure made it unrealistic.
Basic Fun!, which generates $200 million in annual sales and employs 165 people, had been considering acquisitions to expand its business. But Foreman admitted he has now put those plans on hold due to the uncertainty surrounding trade policies.
“[A tariff] sounds good—‘Let’s stick it to them!’ But the ripple effect is unbelievable,” he said.
As the Toy Fair continued, manufacturers across the convention center met discussions of Trump’s tariffs with frustration, disbelief, and concern for the future.
“20% is a lot,” said Ada Luo, sales director for Shenzhen-based Wonderful Party, which produces holiday-themed accessories. “10% maybe… between the supplier and the buyer we can share, but 20%? We don’t have a clue.”
With no immediate relief in sight, the toy industry now faces tough decisions on pricing, profitability, and the viability of their U.S. market presence in an increasingly uncertain economic landscape.
