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..What the public wants.
It was a nice quiet spring week. The sun was shining (which should cheer outdoor suppliers up), the latest Pokémon launch had queues forming outside toy stores at the end of last week, Easter is rapidly approaching. So far, so good. And then…bam! So-called ‘Liberation Day’, which may as well have been called ‘global economic shock day.’
Now, there are still far too many ‘known unknowns’ for me to feel truly confident about what I am about to say. Isaac Larian and Toy Association president Greg Ahern both posted hopeful comments on LinkedIn in the aftermath of the announcement, focusing on the possibility of toys being part of a reciprocal tariff-free arrangement between the US and key trading partners.
But – and it is an awfully big but from where I am sitting – I have seen nothing in any of the coverage about the new tariff regime which suggests that specific category exemptions are part of Trump’s master plan. And anyway, how do you negotiate with someone who puts a tariff on an island only inhabited by penguins?
Let’s be clear: Trump was elected with a powerful majority and mandate – the public gets what the public wants. Except, as we saw with Brexit, perhaps people were not fully aware of just what it was they were voting for.
The tariff table makes brutal reading. China is now at a grand cumulative total of 54%. For those who ‘de-risked’ their supply chain by switching production to other countries, Vietnam is 46%, Thailand 36%, Taiwan and Indonesia 32%, India 26%… better than China for sure, but still hammered. The UK and Turkey get off lightly with 10%, while the EU is hit with 20%. Although to be fair, it is difficult to see any real positives in that list.
And if there is a belief among the Trump administration that these tariffs will somehow persuade companies to re-shore manufacturing, and that we’ll see toys being made in large quantities in the USA in the coming years…. don’t forget, we still have plenty of bridges here to sell you. Even if the economics could be made to work (and I am highly sceptical that would be the case), I can’t see the American workforce embracing the concept.
How this results in anything other than steep price hikes on toys I can’t fathom. For Americans, tariffs are essentially a tax rise – arguably one of the steepest in US history (ironic for an administration that purportedly believes in cutting taxes). The danger is that it will end in tears not just for the US economy, but the global economy too – $22 trillion was wiped off global stock markets in a single day yesterday.
For now, the glimmer of hope rests with the possibility of toys being made exempt from these brutal punishment beatings – we just have to hope that proves to be the case…
Read the rest here.
