Like the song says, “What a long, strange trip it’s been.”
It was about 20 months ago that the first new 10% tariff hit importers of goods from China. Within a few months, the tariff burden on many Chinese imports reached an astonishing 145%, effectively creating a temporary embargo on shipments from China. The Supreme Court later described the sequence that took the effective tariff rate on most Chinese goods to 145%.
For those of us in the toy industry, it wasn’t just an academic trade-policy debate. For several months, it crippled our ability to operate normally. Eventually those tariffs came down enough for business to resume, but the legal fight continued.
Then came what I’ll call Liberation Day 2.0.
The Supreme Court ruled that IEEPA did not give the President the authority to impose these tariffs. That landmark case was brought by Learning Resources and others, with the Liberty Justice Center playing a central role in the successful challenge.
When the Administration subsequently imposed a new global tariff under Section 122 of the Trade Act, Basic Fun!, represented by the Liberty Justice Center, along with Burlap & Barrel challenging that tariff as well.
On May 7, the Court of International Trade ruled in our favor and held that the Section 122 tariffs exceeded the authority Congress had granted. The government appealed, and that litigation continues as we seek complete relief, including refunds of the tariffs we paid. Ultimate success in that case will likely enable all importers to seek their own refunds on the 122 tariffs. Stay tuned!
Meanwhile, another tariff regime was implemented under Section 301, and the Liberty Justice Center is challenging that action in a separate case.
Which brings us to where we are today—and potentially a Liberation Day 3.0.
Over the past year, a small and incredibly dedicated group at The Toy Association, led by Greg Ahearn, Kathrine Belliveau, and our Association Chairman Geoffrey Greenberg, together with the Association’s government-relations teams, industry advocates and toy executives willing to speak publicly, have been working tirelessly behind the scenes.
They’ve traveled to Washington, taken meeting after meeting and made the case that toys are exactly what the U.S.-China Board of Trade was created to address:non-sensitive consumer products whose tariffs ultimately increase costs for American businesses and families.
Last week came an enormous step forward.
The United States and China announced recommendations covering approximately $30 billion of non-sensitive products on each side that could receive more favorable tariff treatment. Toys are among the products positioned to benefit from that process.
Think about that for a moment.
Only $30 billion of imported products out of over $400b could make it into this initial bucket, while virtually every importing industry in America had an argument for why its products should be included.
Toys made it.
That is a tremendous accomplishment for the Toy Association and everyone who worked on this effort. If fully implemented as intended, the potential savings to the toy industry and ultimately consumers could be enormous, while giving companies something almost as valuable after the last 20 months: certainty!
But—and this is important—
The job is not finished.
Today we only have a” recommendation for preferential tariff treatment”. We do not yet have the final implemented tariff relief.
For an importer, the ultimate test is very simple:
What does U.S. Customs charge us when containers full of our toys arrives at the port?
Until the Administration completes the implementation process, establishes the applicable tariff treatment and effective date, and CBP begins collecting the reduced rate or better stops collecting any tariffs, we’re still paying the tariff. So now is not the time for our industry to declare victory, pop Champaign and sit quietly. It’s time to thank everyone who got us this far—and then keep working.
Our message to the Toy Association, our advocates in Washington and the Administration should be simple: Let’s see the job finished.
Convert the Board of Trade recommendation into actual tariff relief as quickly and comprehensively as possible.
The toy industry is making its 2027 commitments right now. We’re setting prices, placing factory orders, negotiating retailer programs and deciding how much inventory to bring into the country. The sooner we know the actual tariff rate, the sooner that certainty can flow through our businesses, our retail partners and ultimately to American consumers.
When that happens, We’ll call it Liberation Day 3.0.
There is also a broader lesson from the last 20 months. The United States and China have an extraordinarily important and complicated economic relationship. The recent discussions between the two countries underscore how interconnected the two economies remain.
I’ve said throughout this period that China remains extraordinarily important to toy manufacturing. Over several decades, our industry and our manufacturing partners built an ecosystem there encompassing tooling, engineering, safety, quality control, materials, components and highly specialized manufacturing capabilities. Moving out is not an option.
Companies that can economically diversify their supply chains certainly have reason to consider doing so. But for much of the toy industry, China remains an essential manufacturing partner today and for the foreseeable future. What last week showed us is that it’s all about the two big dogs US and China and moving ends up costing more than staying in so many ways.
After tariffs, lawsuits, embargo-like conditions, supply-chain disruptions and almost two years of uncertainty, seeing toys included in this process gives our industry something we haven’t had enough of lately: A reason for optimism.
So, congratulations and thank you to the small group of people who worked incredibly hard to get toys this far.
But let’s remember: We’re on the list. We’re not across the finish line.
Let’s keep working, have a great holiday season, and hopefully we’ll be celebrating Liberation Day 3.0 very soon.
All the best going into 2027!
