- Toy maker Mattel warned on Friday that President Donald Trump’s tariffs “will impact the entire toy industry.”
- The industry’s toys are not yet on Trump’s tariff schedules, but some raw materials are.
- The company reported third-quarter earnings that missed both revenue and profit.
- Watch Mattel trade live here.
Mattel, the second-largest toymaker behind Hasbro, warned on Friday that President Donald Trump’s China tariffs would hurt the toy industry.
“This is something that will impact the entire toy industry,” Ynon Kreiz, CEO of Mattel, told investors during his company’s third-quarter earnings call on Friday.
“The Toy Industry Association of America recently reported that 85% of all toys sold in the United States are imported from China. In our case, it’s actually less than two-thirds, so we’re a little better off.”
The Trump administration launched a trade war against China in March, announcing plans to post a 25% tariff on $50 billion worth of Chinese goods. Trump then announced another 10% tariff on $200 billion of goods imported from China in September and threatened to impose third-round tariffs on an additional $267 billion of Chinese goods.
On Friday, the first two rounds went into effect and individual toys are not yet on the tariff list, but some raw materials are, such as lithium batteries and the chemicals that make up Silly Putty. Also, the third set of tariffs would likely include finished toys.
“With China supplying the vast majority of these juvenile products and with no alternative manufacturing capacity readily available elsewhere, tariffs on these juvenile products will result in higher prices and less choice for American consumers,” wrote Corinne Murat, director government affairs at Mattel. in a public letter to the Office of the United States Trade Representative (USTR) in late August.
Mattel announced Thursday evening third quarter results below Wall Street expectations. Mattel earned an adjusted $0.18 per share on revenue of $1.44 billion, missing the $0.15 and $1.5 billion analysts polled by Bloomberg were looking for.
The company also said gross sales fell 6%, mainly due to a 3% negative impact from Toys R Us’ bankruptcy filed last year and a 3% negative impact from its slowing business in China.
If anything sounds encouraging, it’s that the toymaker has an edge over the competition: the majority of its Hot Wheels and Barbie products aren’t made in China. gros sales in North America increased by 6%, marking the strongest sales growth in 11 quarters, driven by strong Barbie sales.
Mattel was down 2.5% after Friday’s earnings call and 15% this year.