China could well be considered the toy maker to the world. But if the trade war between China and the U.S. continues next year, the playthings will become a lot more expensive for American consumers.
The U.S. Toy Association said around 85 percent of the toys sold annually in this country are made in Chinese factories.
Billions of dollars worth of toys are shipped each year, sold by companies in the U.S. But they could be more expensive next Christmas.
But negotiations are ongoing after a meeting between President Donald Trump and China’s Xi Jinping at the G20 this month. There’s hope for a deal, but if it falls through, get ready for more tariffs.
“Quite simply tariffs are a tax on consumers,” said Rebecca Mond, vice president, of the U.S. Toy Association.
The U.S. has already put tariffs on $200 billion in Chinese imports. In other words, U.S. companies have to pay more to buy Chinese products. And the administration has threatened to tax $267 billion more. Toys have largely avoided that tax for now, but if the trade war continues, they’ll get hit too.
“If tariffs were to go into effect on toys sold in the U.S., that would be devastating, particularly for small companies,” Mond said.
The U.S. could avoid tariffs if it imported from somewhere else. But China is unique. The skilled labor there, the established supply chain, the same factories capable of making different toys depending on demand, no other country can do that.
Even if tariffs are put in place, experts said moving all this to another country, say like the U.S., just doesn’t make financial sense.
So companies keep buying Chinese products, even if tariffs make them more expensive. That extra cost will likely get passed on to the consumer.
“They (consumers) need to spend $150 USD or $200 USD on what used to cost just $100 USD. It is going to be tough, especially for medium and low-income Americans,” said Wang Xiaojun, general manager, Zhejiang Morning Crafts Co. Ltd.
The Trump administration said tariffs are a tool to force China to change. For decades, they’ve stolen U.S. intellectual property and best practices and restricted market access for American companies. That’s a fact but changing that behavior with tariffs has a cost.
“Trump’s policy was meant for helping the American people, but it’s a double edged sword. It hit China, but It’s also going to hurt American wallets,” Xiaojun said. This can only change unless both sides can come to an agreement.