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Toy Association Says Tariffs Will Devastate Industry, Result in $3.4 Billion in Lost Wages

The Toy Association testified yesterday that new tariffs would devastate the toy industry and cause a 10 percent reduction in the U.S. toy workforce.

Rebecca Mond, the Association’s vice president of federal government affairs said a 25 percent tariff applied to toys and games would cause 68,000 lost jobs and $3.4 billion in lost wages.

“Overall, tariffs on the toy industry would reduce the economic impact of the toy industry on the U.S. economy by approximately 10 percent, or $10.8 billion,” said Mond.

The Toy Association also noted that tariffs would have a severely negative impact during what is an historically inopportune time for the toy industry given the recent bankruptcy and liquidation of Toys“R”Us, which resulted in the closure of 800 stores and the elimination of 30,000+ U.S. jobs.

Testimony also pointed to the unfeasibility of moving current toy manufacturing out of China, given the efficiencies of the arrangement between U.S. toy companies and Chinese factories which allow the industry to provide American consumers with a broad array of fun and safe toys at highly competitive prices.

“For the industry as a whole and for the vast majority of the 3 billion toys sold in the U.S., the manufacturing infrastructure and capacity is simply not available in the U.S. or elsewhere around the world. Furthermore, consumers expect toys to be affordable. Toy manufacturing is too labor intensive to be a cost-effective option in the U.S.,” said Mond.

Of even greater importance to American consumers, the industry has invested in ensuring that Chinese suppliers produce toys that comply with strict U.S. safety standards that protect America’s children and families, added Mond. Tariffs would force toy companies to hastily move their manufacturing base elsewhere (at significant cost), where they would have to identify, invest in, and educate new manufacturers who are unfamiliar with U.S. safety requirements.

“Moreover, Chinese toy companies selling direct to consumers via e-commerce platforms would have an edge on U.S. toy companies that import larger volumes to sell at local toy and hobby shops, because toys imported under the $800 de minimis exemption would not be subject to tariffs,” stated Mond. “The tariff may result in an increase of IP infringing toys as consumers seek out cheaper options.”

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