In response to escalating tariffs enacted under President Donald Trump’s administration, toy manufacturing giant Mattel has announced plans to raise prices for certain products sold in the United States. Simultaneously, car manufacturer Ford disclosed that tariffs could inflate its costs by approximately $1.5 billion this year.
The U.S. constitutes roughly half of Mattel’s worldwide toy sales, and the company currently imports about one-fifth of its American inventory from China. To mitigate the impact, Mattel aims to decrease reliance on Chinese imports to below 15% by 2026. “The company is operating in an uncertain macro-economic environment with significant volatility, including changes in global trade policy and U.S. tariffs,” Mattel stated in its first quarter report.
“Given the volatile macro-economic environment and evolving U.S. tariff landscape, it is difficult to predict consumer spending and Mattel’s U.S. sales in the remainder of the year and holiday season. The company is therefore pausing full-year 2025 guidance until Mattel has sufficient visibility.”
Mattel also stated it was “taking mitigating actions designed to fully offset the potential incremental cost impact of tariffs on future performance.” These actions include accelerating diversification of its supply chain, reducing reliance on China-sourced products, optimizing product sourcing and product mix, and taking “pricing action” in its U.S. business.
Ford, facing similar financial strain, also retracted its previous financial guidance. The automaker anticipates that tariffs, particularly those affecting imports from Mexico and Canada, will increase its expenses by $2.5 billion this year alone. However, Ford intends to counteract about $1 billion of these costs through efficiency and cost-saving initiatives.
According to Ford’s CEO Jim Farley, the tariffs have caused “industry-wide supply chain disruption.” The automaker will hold off on raising vehicle prices until competitive responses to the tariffs are observed.
“These are substantial industry risks, which could have significant impacts on financial results, and that make updating full-year guidance challenging right now given the potential range of outcomes.”
Last week, General Motors similarly warned investors about tariff-related financial setbacks, revising its profit outlook downward and forecasting potential costs as high as $5 billion by 2025 due to Trump’s trade measures.
The Toy Association, a trade organization, surveyed 400 American toy companies last month and found that nearly half believed Trump’s tariffs would put them out of business.
Mattel CEO Ynon Kreiz acknowledged the disruptive impact of these tariffs, emphasizing broad industry-wide effects.
“Toys are foundational to a child’s growth and development. Zero tariffs for toys gives the greatest number of children and families access to play.”
“There’s no question that tariffs are creating disruption in the industry. Many companies have stopped production and shipping to the U.S. as a result of tariffs from China. We do support the Toy Association’s advocacy for zero tariffs on toys.”
Since Trump’s inauguration earlier this year, the trade conflict between the U.S. and China has intensified, with the most recent tariffs on imported Chinese goods sitting at 145%, the highest level in a century. China, in turn, retaliated with additional levies of 125%, significantly altering global supply networks. Nearly 80% of the toys sold in the U.S. are manufactured in China.
To adjust its supply chain, Mattel has increased production of popular products like the Uno card game in India to serve the U.S. market. It has also redirected some Chinese production towards international buyers.
Kreiz announced on Monday that the company would also be moving the production of 500 toys from China to other nations. Besides China, Mattel already imports products, including its iconic Barbie dolls and Hot Wheels cars, from Indonesia, Malaysia, and Thailand—countries briefly targeted by Trump’s tariffs in early April before receiving a temporary exemption.
In 2026, Mattel intends to reduce U.S. imports from China to less than 15% and, by 2027, to fewer than 10%. Mattel expects between 40% to 50% of its products to remain priced at $20 or less. Mattel’s international operations account for approximately 50% of its total sales, and these are not anticipated to be heavily impacted by tariffs.
Mattel CFO Anthony DiSilvestro explained in a recent earnings call that the company anticipates around $270 million in tariff-related expenses starting in the July quarter, and that’s “before you consider any of the mitigating action.” Previously, Mattel had set growth expectations for annual net sales between 2% and 3%.
Analyst Zak Stambor from Emarketer underscored Mattel’s vulnerability amidst ongoing trade disputes, stating, “The toymaker is squarely in the crosshairs of Trump’s tariff war.”
Currently, Mattel executives have reported that they have not observed any significant order cancellations. The company indicated that any forthcoming price increases would occur in “close collaboration” with retailers, acknowledging the potential for resistance from store chains regarding these hikes.
When questioned about trade relations with China at a cabinet meeting at the White House on Wednesday, Trump remarked that children do not necessarily require excessive quantities of toys, attempting to downplay fears of toy shortages due to these trade tensions.
“Well, maybe the children will have two dolls instead of 30 dolls, and maybe the two dolls will cost a couple of bucks more than they would normally.”
Amid the market unrest, Mattel reported a “strong start” to the second quarter, anticipating a boost in product sales linked to the upcoming “Jurassic World Rebirth” movie, as well as offerings from Hot Wheels and the “Minecraft” film.
Executives attempted to portray the trade war as a challenge the company could endure, focusing on efforts to enhance the flexibility of its manufacturing base while maintaining affordable prices. “The No. 1 toy item in the world, the Hot Wheels basic car, we sell for just over a dollar,” Kreiz said.
In a strategic shift, both Mattel and its competitor Hasbro Inc. (HAS) are seeking to reduce their dependence on China for manufacturing. At the same time, they are leveraging their extensive portfolios of toy-related intellectual property, aiming to transform these assets into films, television shows, games, and various other forms of content.
The difficulty in predicting consumer spending, especially during the lucrative holiday season, has led a slew of other companies to halt their full-year 2025 guidance. According to experts, investors avoid situations where there is a great deal of uncertainty, such as when corporations withdraw their predictions.
In April, major companies such as technology leader Intel, footwear manufacturers Adidas and Skechers, along with consumer goods powerhouse Procter & Gamble, outlined the effects of tariffs on their operations.
“The very fluid trade policies in the US and beyond, as well as regulatory risks, have increased the chance of an economic slowdown with the probability of a recession growing,” Intel’s chief financial officer David Zinsner said during a call with investors.
Adidas issued a warning that impending tariffs will result in increased prices for its popular footwear models, such as the Gazelle and the Samba, in the United States.
The finance chief of footwear firm Skechers, David Weinberg, told investors, “The current environment is simply too dynamic from which to plan results with a reasonable assurance of success.”
Procter & Gamble, the manufacturer behind well-known brands such as Ariel laundry detergent, Head & Shoulders shampoo, and Gillette shaving products, has announced that it is contemplating adjustments to its pricing strategy in response to rising costs associated with materials sourced from China and other regions.
Moumita Basuroychowdhury is a Contributing Reporter at The National Digest. After earning an economics degree at Cornell University, she moved to NYC to pursue her MFA in creative writing. She enjoys reporting on science, business and culture news. You can reach her at moumita.b@thenationaldigest.com.
