34 percent, 54 percent, 104 percent, 145 percent or 165 percent !!!
Why not make it a billion percent? My last post was about “passing it on” when tariffs were 10 percent and 20 percent. Mr. Trump made that a moot point since there is no way but to pass on the tariffs, if you could even risk bringing in product at these rates. Well after a hellacious ride since “Liberation Day” last week, the moving target on tariffs is squarely where it was most likely to be from day one…China.
Since 80 percent of toys sold into the United States are from China, this is catastrophic for our industry. For now, the lucky few that are making some plush, pop figures, bricks, and plastic trucks in places like Vietnam are getting a break, but the rest of us are in the firing line. My position at Basic Fun has been to put an immediate freeze on all shipments from China. We are holding all product that hadn’t gone out by the April 9th from the factories. There is no point to try to catch a falling knife…and no way to take the chance on more than double the cost of the product and the retail price until we get more clarity on this situation.
As I’ve said numerous times on this topic, it’s all about the two big men measuring the size of their private parts and making a deal. I have no idea if we are at the peak of how bad this can get, or there is still more to go.
I’d suspect that Mr. Xi has three clear options: stay silent and let things stew, go nuclear or reach out and say “ok, now I know you’re now ready to make a deal; so, let’s make a deal.”
The nuclear option would be for Xi to shut down American businesses in China. No more shipments of iPhones, no more going to Starbucks or McDonald’s, kicking the likes of Goldman Sachs and PWC out of China and down the line. He’s got a lot of leverage he’s not messaged yet if he wants to get nuts. He also doesn’t have a midterm election to worry about, or public opinion in the media. We are all just going to have to put our thoughts and prayers to hoping a deal get’s done quickly, or it’s going to be a very bleak year again.
A shout out to Greg, Kathrine, and Adrienne at the Toy Association as they are working night and day to lobby for our industry to try to keep us all informed and to do all that can be done to promote “no tariffs on toys.” Most of us grouse about paying our association dues each year and wonder outside of Toy Fair what that money goes for. In times like these as it was back when we had the lead paint and magnet issues 15 years ago, the TA is there to advocate for us. They’ve also created a great new toy center west in LA so kudos to them. Greg is a game changer for our industry.
So, for now if you are making goods in places like Vietnam, India, and Indonesia as well as of course the good ole USA, you are in a good place. At least for the next 90 days. Ship, ship, ship! Also, for those of us that have inventory domestically, it will be an opportunity to work that stock down and turn it into much-needed cash.
None of this is good for America and our economy this year. A ton of people are getting wiped out in the stock market covering short loses or scared selling, the consumer is going to be in a funk, and a recession is likely. Typically, we always used to experience toys still selling well during a recession, but that might not remain the case in this day and age, so we can’t count on that. We need everyone’s voices and not just on LinkedIn but with your congress members, local media, and your own broad-based social media. You must tell our story and how detrimental this is going to be for our industry and your business or place of work if this persists. Don’t be silent and keep hope alive!
Jay
Ask Jay Foreman who he voted for. FAFO.