American Toy Companies Face Supply Chain Freeze Due to High Tariffs
A significant number of American toy companies are canceling and delaying orders in response to steep tariffs on China, which manufactures nearly 80% of toys sold in the U.S. An industry group has warned that the toy supply chain is paralyzed, posing a threat to many businesses and potentially impacting Christmas this year.
For consumers, the holiday shopping season is months away, but for retailers and manufacturers, it is already underway. The tariffs are causing disruptions in the supply chain.
According to a recent survey by the Toy Association, which represents manufacturers in the U.S., 80% of mid-sized companies and 64% of small companies are canceling orders, while 87% of mid-sized companies and 81% of small companies are experiencing delays.
Many companies are at risk of not surviving until the holidays. Almost half of small and mid-sized firms, accounting for 96% of American toy companies, reported they might close within weeks or months due to the current U.S. tariff policies.
The Toy Association stated that tariffs of 145% on Chinese imports have halted toy production, severely affecting small and medium-sized enterprises (SMEs), many of which are family-owned. This situation has resulted in canceled orders and significant retail purchase cancellations, which could soon lead to loan defaults and bankruptcies. The association warned that "Christmas 2025 is at risk."
The holiday shopping season is crucial for retailers, often determining annual profitability. Many stores rely on Black Friday to turn profitable, shifting from red to black in their financial records.
China supplies nearly 80% of toys and 90% of Christmas goods sold in the U.S. The production-to-store lead time is approximately four to five months, as reported by The New York Times.
Greg Ahearn, CEO of the Toy Association, indicated that if production doesn’t commence soon, a toy shortage during the holiday season is highly probable.
Jennifer Bergman, owner of the West Side Kids toy store in New York, expressed concern about having sufficient toys to sell at Christmas. She reported that an importer redirected a large scooter order to Canada to circumvent U.S. tariffs, leaving her with only part of the shipment.
President Donald Trump acknowledged that the tariffs might affect toy availability but minimized the potential impact, suggesting children might have fewer toys, with some being slightly more expensive.
Despite these challenges, U.S. toy giant Hasbro recently reported robust first-quarter earnings and maintained its 2025 guidance, attributing its success to quickly shifting production to mitigate tariff effects.
On the other hand, MGA Entertainment, the maker of Bratz, LOL Surprise, and Little Tikes, expressed concern, pointing out that Hasbro’s results don’t mirror the overall industry situation.
MGA founder and CEO Isaac Larian stated that consumers, particularly families already under financial pressure, will face the brunt. He predicted significant shortages across toy aisles this Christmas, with price increases in double digits or higher.
This report originally appeared on Fortune.com.
