"A leading Republican lawmaker warned on Tuesday that Congress will not be able to lower the U.S. corporate tax rate to the 15 to 20 percent range sought by President Donald Trump unless a controversial "border adjustment" proposal remains part of tax reform. The proposal…would impose a 20 percent tax on imports."
"U.S. Republican ties lower business tax rate to border adjustment", Feb. 24, 2017, Reuters, David Morgan
In a sense, it would be children who would pay the price in toys that cost more and do less.
There is an idea being bandied around about a tax on products that are made in other countries and imported into the United States. Whatever your position on "Made in America", this is not a good thing for the toy industry.
What percentage of toys sold in the United States are made in the United States? 3.5% according to a 2010 report (the latest figures I could find from the Commerce Department). Is this a new situation? Well, no, toys have always been made in other countries. In fact, prior to World War I, Germany was by far the world's leading producer of toys.
After World War II that all changed as American companies went to Japan, then Taiwan, next Hong Kong and finally China to make their toys due to the low cost of labour. In other words, the American toy industry has for decades been predicated on a very low retail price for a lot of play value (and in some cases a lot of plastic).
Bottom line, a border tax would be a shock to the toy industry and to consumers and their children. Should a tax be placed upon goods made by American companies in foreign countries, it would result in those costs be passed on to consumers. In a sense, it would be children who would pay the price in toys that cost more and do less.
We as an industry need to keep an eye on potential legislation and make sure that the toy industry is either exempted or is buffered so that any adjustments that might take place do so over time. This would allow the industry to catch its breath and make the necessary adjustments.
What do you think about this? Do you think we looking at a problem?