The Biden administration’s announcement of new tariffs on Chinese EVs and component parts last week reawakens the issue of protective trade policies. The goal is to protect the growing EV business in the United States and protect it from what the administration has expressed is unfair competition from overseas.
This is distinct from some of the Trump-era tariffs, which were largely political and punitive, did little to protect U.S. industries, and raised prices on consumers without much, if any, benefit. Protective tariffs while also potentially raising consumer prices for domestic goods also can protect jobs and by extension communities and their quality of life.
The purpose of this column, however, is not to debate the politics of tariffs. Rather, it’s to look at their historic effectiveness in helping to build the U.S. toy business in the first half o the 20th century.
At the end of WWI and in the ensuing several years, tariffs on toys made in Germany and later Japan helped bolster the expanding, domestic toy manufacturing business. In some cases, these tariffs reached 100 percent, and at the time they were deemed necessary. A.C. Gilbert, father of the Erector set, was a huge proponent of both the U.S. industry and tariffs. He saw the potential for Germany and Japan to “dump” toys in the U.S. market as the economies tried to recover from war and economic depression. Gilbert also spearheaded a major “buy American” drive implemented by the Toy Association, which compared buying U.S. toys with patriotism, and he famously said, “We have to convince people that ‘toys’ does not mean ‘made in Germany.’”
After the second World War, the same tariff strategy effectively shielded the business from foreign competition again. Japan, which like the U.S. had expanded its manufacturing capabilities to support the war effort, turned to production of toys, many of which were inexpensive. If you grew up in the 1950s or 1960s, you probably know that the term “Made in Japan” was often used to describe cheaply made goods.
Once again, after the Korean War, tariffs protected the U.S. manufacturers—and supporting the U.S. industry was an overriding goal of the Toy Association. (Then called Toy Manufacturers of America.)
Beginning in the 1960s, however, a global shift would redefine the industry and, in the long run, make tariffs less effective. Production started to move overseas. Starting with fabric and doll hair and then slowly expanding into plastic and metal fabrication, companies found that they could produce more effectively (read: less expensively) overseas. Japan continued to evolve into a very sophisticated manufacturing region and soon “Made in Japan” meant sophisticated electronics with plastics molding moved to other regions.
Thus, the pattern was established of expanding manufacturing into new territories and regions—one that continues to this day.
Now, this is on some level a gross simplification of the history to be sure, and there are many more issues relating to manufacturing, such as established infrastructure to support businesses. Historically tariffs effectively protected many U.S. industries, including steel. The point, though, is that in 2024, the toy business is truly a global enterprise.
Tariffs, then, are less effective, at least for our business. There is no purely domestic toy industry to protect any longer—and there hasn’t been for the better part of the last 50 years.
That’s why the current tariffs on EVs remain intriguing. It is in many respects a reflection of our industry a century or so ago. Isolationism is only possible when an industry is domestically self-sufficient. Few are any longer. It’s why some of the punitive tariffs again being promoted in a campaign year would not help business; they would fall heavily on consumers.
Side note: I’m often asked, with some level of aggression by people not in our business, “Why can’t Barbie be made in the U.S.?” The answer, of course, is that she can. (I’m not picking on Barbie, but for people eager to create conflict, she’s still the easy, argumentative lighting rod she’s been since the 1980s.) I then say, “If you’re willing to pay $50 for Barbie and wait years for the manufacturing infrastructure to be up and running, you can have your American-made Barbie.”
Finally, since we are a globally interdependent industry, our trade policies should aim at facilitating effectiveness in ways that reflect our current reality, just as they have done historically.
What do you think?
