At this writing the election is less than a week away, but a report in The Hill says that companies are already taking anticipatory, preemptive actions to dull the impact of the promised tariffs on all goods from China, should Trump win the election. The report says that orders are up, pre-election, and cites a rise in warehouse space taken by companies.
As Jay Foreman explained in our recent Playground Podcast interview, such moves, many of which a President can take without congressional approval would be devastating for smaller toy companies, and significantly raise prices for consumers and crush margins for companies.
Moreover, Elon Musk is saying that crashing the economy is necessary, all of which in the final days of the campaign comes against reports of a robust economy and a “soft landing” as inflation has receded.
Current tariffs in the U.S. on electrical vehicles and components and steel are protecting U.S. industries and jobs, which is the goal of these moves. There is no economic justification for putting tariffs on toys.
As we’ve noted before, the times that tariffs have worked to protect the toy industry were in the years following the two World Wars, when protecting a growing and then-booming domestic toy industry was deemed necessary and, ultimately, was effective.
As we’ve mentioned before in this space, the toy industry is an inter-dependent global industry, and tariffs will only cause damage.
Of course, there are multiple issues at stake, but tariffs are not the solution at least for the toy industry. It is cynical to use the threat of tariffs as a simplistic, provocative campaign talking point. Over and above insulting the intelligence of the people and making punishment of a perceived enemy the rationale for such moves, the real, unnecessary pain this would cause throughout the global supply chain is downplayed and ignored. In the case of Musk’s opinions, it is an almost Orwellian precept that short-term suffering is necessary for future gain, but in comes in the face of a reality that undermines his concept.
The toy industry has faced challenges before, but the idea that it would face one so unnecessary should give all of us pause.
What did the toy companies did in 1980’s. They all closed their manufacturing and went to China, taught them how to manufacture toys as they utilised the cheap labour of China. During Covid all International toy companies realised that they have put all eggs in one basket. Now they are facing the threat of tariffs for imports from China. What is the solution? Do the same what you did in 1980’s. Come to India, there is plenty of labour, educated engineers and 65% young population available. Many factories are willing to invest and expand to manufacture toys. Imports of toys from India to USA no tariffs. Many sensible companies have already started manufacturing in India transferring part of their ranges and some are doing it now. India is not going to take 20 years to learn toy manufacturing. Just 2 to 3 years will do. Come to India and explore our hospitality and English speaking staff in the factory. Many of you may be aware that iphone has started their manufacturing in India and iPhone 16 that was manufactured in India was launched in simultaneously in India too. Apple found that India has become their largest market for iPhones.
WELCOME TO INDIA
Thank you David. Our visits last a few weeks ago with you and your guidance opened my eyes to how many factories in India are available for toy companies.
I took the first step by visiting 8 factories over a two week period in 5 different regions and I’m convinced that India is the future having started manufacturing in China 1983.