Context:

Mattel, the maker of Barbie dolls, plans to raise toy prices in the United States due to the impact of tariffs implemented by former President Donald Trump, which have significantly increased costs for the toy industry as most toys are manufactured in China. The company anticipates $270 million in additional costs this year from these tariffs, prompting it to diversify its supply chain and reduce reliance on Chinese manufacturing. Mattel intends to relocate the production of 500 toys from China to other countries, aiming to reduce China's share in its global production to less than 40% by 2025. Despite the current financial strain, Mattel has not yet observed an impact on its earnings for the first quarter but acknowledges the uncertainty in future consumer spending. The company, along with others, has paused its full-year 2025 financial guidance due to the unpredictability of the market, especially during the holiday season, as it advocates for zero tariffs on toys to ensure broad access to play for children and families globally.

Dive Deeper:

• Mattel is facing increased costs due to tariffs on goods imported from China, where nearly 80% of toys sold in the U.S. are manufactured, resulting in plans to raise toy prices domestically.

• The CEO of Mattel, Ynon Kreiz, indicated that current tariffs are expected to cost the company approximately $270 million this year, which has prompted considerations of various scenarios for price adjustments and supply chain diversification.

• To mitigate the impact of tariffs and reduce dependency on Chinese manufacturing, Mattel plans to relocate the production of 500 toys to other countries, with a target for China to account for less than 40% of its global production by 2025.

• Despite the increased costs, Mattel reported that tariffs had not affected its earnings for the first three months of the year, although future financial outcomes remain uncertain due to unpredictable consumer spending.

• The company has paused its full-year 2025 guidance, highlighting significant uncertainty in the market, especially concerning consumer spending during the holiday season, and advocates for zero tariffs on toys to maximize accessibility for children and families.

• Mattel's efforts to diversify its supply chain involve sourcing products from seven different countries, with plans to further reduce U.S. imports from China to less than 15% by 2026 and less than 10% by 2027.

• The toy industry's challenges are compounded by a 145% tariff on goods from China, underscoring the critical need for strategic adjustments and advocacy for policy changes to sustain market stability.