When these tariffs first hit I made the subject of my blog: Pass it on! The reason I did this was because if we didn’t message to push the the cost of the tariffs across as “higher prices for consumers,” the administration would have won their battle and we’d all be on our way out of business now. The fact that we kept up a drumbeat of “tariffs are taxes and will raise prices” helped the administration understand the reality and the facts and moved for a settlement, which will end up being about as good next to zero as we could have hoped at this point.
Thirty percent for China will go to 10 percent as soon as China figures out the fentanyl trap and makes a show of cracking down. That should get 20 percent shaved off the tariffs, so that China ends up at the 10 percent universal rate, where most other countries are now. Of course, that’s for the next 60 days for the others and 90 days for China. However, I believe China is baked and will come down. Frankly, I’m not so sure about other markets like Vietnam and India. Time will tell.
The mission for us now, I believe, is to work to get all our “partners” to contribute to President Trumps vision and not let our member toy companies get stuck holding the bag on the 30 percent!
Trump and his team said “we all need to endure a little short term pain for some long term gain.” That means our China vendors, our member companies, our retailers, licensors and consumers “all” need to chip in! We shouldn’t have to bear the burden solo because frankly we don’t have the margin. We know some retailers are going to try to hang this on us and push us to absorb it all. It’s the same with licensors, and, as we saw with Mattel, Trump doesn’t want to hear prices are going up. However, we know we can’t endure this alone nor we can kiss away any chance of profit this year.
I’m advocating a shared responsibility. China vendors and industry members shoulder 1/3, retailers 1/3, and consumers 1/3. In addition, the licensors have to chip in and allow the tariff to be treated like a tax and an allowable deduction.
We all need to work on this internally and externally. I will be working this message hard. I don’t want to work another year and give away my profits to the government…or ocean freight lines! Many of us will be in Las Vegas next week. It’s up to us to advocate hard for our interests, the health of our companies, and our industry. Those of us, especially to the big licensees need to have the courage to push and impress upon them to help. The folks at Disney, Warner, Nick, Nintendo, Pokémon, Sanrio, and so many others–including fellow toy companies like Mattel, Hasbro, Spinmaster, and Jazwares need to do their part.
We need our brother and sister companies toy companies have to do the right thing too. There is no reason we should be paying a royalty on tariffs we are suffering. At the same time, our retail partners have to support us as well.
So, as the man said: Fight, fight, fight,” and don’t give up until this burden get’s shared.
Good luck to us all!
Jay
Jay: Well said, and absolutely on point; there’s no way there should be royalties paid on tariff and duty. Simply not fair.