The brand new and outdated variations of the basic Barbie dolls are on show at Mattel Design Middle in El Segundo, California, U.S., February 22, 2024.
Mario Anzuoni | Reuters
Mattel may quickly increase the costs of toys like Barbie and Scorching Wheels in response to new tariffs imposed by President Donald Trump, executives stated Tuesday.
The toy big, which manufactures about 40% of its toys in China and fewer than 10% in Mexico, instructed analysts that it’ll look to maneuver round its provide chain to mitigate the affect of tariffs, nevertheless it’s additionally contemplating worth hikes.
“Definitely in opposition to the tariff, we now have a variety of mitigating actions,” stated finance chief Anthony DiSilvestro on the corporate’s fiscal fourth quarter earnings name. He stated these actions embrace leveraging Mattel’s provide chains and “potential worth will increase.”
“We do work carefully with our retail companions to attain the suitable steadiness and all the time hold shoppers in thoughts once we contemplate pricing actions,” he added.
The feedback come after Trump imposed a ten% tariff on Chinese language items this week. He additionally paused deliberate 25% duties on imports from Mexico and Canada for 30 days.
Economists on either side of the aisle have agreed that the levies will prone to result in worth will increase for shoppers. There isn’t any assure Trump will impose the tariffs on Mexico and Canada, as he has usually used the specter of duties as a negotiating tactic to bend international governments to his will.
Scorching Wheels automobiles by Mattel are provided on the market at a big-box retailer in Chicago on April 23, 2024.
Scott Olson | Getty Photographs
Shortly after Trump introduced the 25% tariff on items from Canada and Mexico, each international locations introduced they might bolster safety at their respective borders, main Trump to droop the duties. The 2 nations had already been enhancing border safety earlier than Trump’s menace.
China and the U.S. have but to return to an analogous settlement to keep away from the tariffs. If the ten% obligation stays in impact, it’ll have a big affect on the toy business, which sources about 80% of its items from the area.
Whereas corporations like Mattel have stated publicly that they plan to leverage their provide chains and work with suppliers to mitigate the consequences of the tariffs, executives have admitted privately that they are loath to tackle the fee themselves and scale back income. If they don’t seem to be capable of move on your complete price of the tariffs to suppliers, some plan to have shoppers pay the remaining by means of worth hikes.
Some corporations with diversified provide chains like Mattel, which operates its personal and third-party factories in seven completely different international locations, have extra flexibility to maneuver manufacturing and lean on suppliers to reduce the hit to income. It additionally does about 40% of its enterprise exterior of North America, the place tariffs aren’t being imposed in the identical means they’re within the U.S.
By 2027, Mattel expects sourcing from Mexico and China to symbolize greater than 25% of complete world manufacturing, down from about 50% now. It does not presently supply from Canada.