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Yes, tariffs are likely to raise the price of imported cars, but have you considered the cost of a Tonka truck? Spencer Soper writes today about the toy industry’s concerns in the trade war. Plus: College presidents talk about the feeling of crisis, and a system to track payments to college athletes has a lot of unanswered questions. If this email was forwarded to you, click here to sign up.

President Donald Trump’s trade war with China could have unintended consequences for the littlest Americans, such as increased choking hazards, lead paint contamination and other risks, if there’s a sudden global shakeup of the toy supply chain. At least that’s what the industry is warning.

US toy sales totaling $42 billion a year are heavily reliant on China for manufacturing. And it turns out Chinese factories are pretty good at meeting US safety standards, toy executives say. They fear that scrambling to quickly source goods from factories in Indonesia, Vietnam and elsewhere to dodge tariffs would be a gamble with product safety.

“Making toys is a pretty complicated process, especially the safety protocols we have to go through,” says Jay Foreman, chief executive officer of Basic Fun in Boca Raton, Florida. “If our supply chain gets turned upside down, we are going to be risking unsafe toys.”

Basic Fun has licensing deals to manufacture and distribute a variety of classic brands, including Tonka trucks, Lincoln Logs and Lite-Brite (ask your parents). Foreman says he recently canceled a trip to Vietnamese factories because their quotes were 20% higher than his Chinese suppliers, which wouldn’t offset Trump’s new 20% tariffs.

But the prospects of toy manufacturing, which left the US four decades ago, ever returning are slim, he says. “If Apple can’t make a $1,000 iPhone in America, how am I going to make a $20 Tonka truck here?”

Trump’s tariff games make toymakers wonder if they’ll pass go. Photographer: Alex Segre/Shutterstock

Making a case to Trump for tariff relief was a big conversation topic last month at Toy Fair, an annual industry convention in New York. Toys had been in high demand early in the Covid-19 pandemic, but went into a slump the past two years. Sellers were hoping for a rebound before the tariffs hit. It isn’t clear what might persuade Trump to pull back, since he’s called tariffs “the most beautiful word in the dictionary.”

Saul Wolhendler, CEO of Flybar Inc., posted an open letter to the president on LinkedIn a week ago, pleading with him to reconsider the tariffs. His New Jersey-based company sells pogo sticks, scooters and other toys made in China, and it scrambled to negotiate with suppliers and retailers in February when Trump imposed a 10% tariff. Then, at the end of the month, Trump upped the China levies 10% more.

“Mr. President, I understand the intent behind these tariffs, but I urge you to look closer at the unintended consequences,” he wrote. “These policies are meant to strengthen American businesses, yet they are creating a ripple effect that weakens them—and ultimately hurts the American consumer.”

In Brief

A College Leaders’ Roundtable

Linda Mills, Marc Parlange, Kevin Weinman, Anne Harris and Justin Schwartz. Photographer: Maegan Gindi for Bloomberg Businessweek. Set Design: Colin Whalen

Is there a worse time to be a college president? As public opinion on higher education continues to sour and the Donald Trump administration threatens huge spending cuts, to say nothing of roiling protests or crippling sticker shock, campuses are on edge. Bloomberg Businessweek’s Anne Riley Moffat and Brad Stone sat down with decision-makers at five top-ranked US schools—Linda Mills, president of New York University; Marc Parlange, president of the University of Rhode Island; Kevin Weinman, president of Marist University; Anne Harris, president of Grinnell College; and Justin Schwartz, chancellor of the University of Colorado at Boulder—to hear how they’re navigating a potential funding crisis and selling the value of a degree in today’s polarized landscape. Here’s a sample of their conversation, edited for clarity and length.

What’s the thing that has surprised you most about being a college president?

Mills: Before I became president, I was in senior administration for 20 years. I did crisis response the whole time. I feel very grateful for that.

Harris: What has surprised me is the familiarity of crisis. I was surprised to recognize it: “This feels like the pandemic; this feels familiar.”

The Trump administration is casting a shadow over all of business, and universities are no exception. If the federal government follows through on its threat to pull back funds from higher education, what will happen?

Schwartz: Business needs a supply chain, and one of the most important elements of the supply chain is human resources. If we’re undermined and that supply chain of talent gets cut off, how do we continue to stay ahead of China and India and Germany—allies and countries that we don’t consider allies? We’re all in economic competition.

Harris: This feels like it’s existential, because of the scale of the funding. Why would you want to lose the talent development of this country? That to me would be the plight that I would bring to the administration.

Keep reading: College Presidents on Trump, Tuition and Universities Under Pressure

Tracking Students’ Sponsorships Isn’t Easy

Illustration: Hunter French for Bloomberg Businessweek

March Madness culminates on April 7, when the NCAA men’s basketball championship game is played in San Antonio. Whichever team wins, it will be the second-most important thing to happen that day in college sports. The main event is slated for a federal courtroom in Oakland, California, where a district judge will hold a hearing on final approval for a settlement between the National Collegiate Athletic Association and former players who’ve sued in class actions over restrictions on pay. Under the agreement, which is expected to be approved, the NCAA would pay $2.8 billion in damages to former athletes and establish a framework for schools to compensate current players, with total pay capped at 22% of the average athletic department’s revenue (about $21 million for next season). It’s a watershed moment. After decades of fighting, the NCAA is fully surrendering the pretense of amateurism in college sports.

It’s also an ambitious gambit to regain control of the market for talent. Along with setting aside money for current and former athletes, the settlement would establish a clearinghouse for player sponsorship deals. Beginning in July, any contract for more than $600 would be subject to a “fair market value” assessment by accountants at Deloitte. At that threshold, most basketball and football deals in the current market would be included. Although it may sound like a routine bit of paperwork, the process promises to be highly contentious, putting the clearinghouse front and center in a power struggle over player pay.

In the latest Field Day column, Ira Boudway writes about the potential mess ahead: The Flawed Plan to Control College Athletes’ Pay

Precious Metals

$3,000
That’s the record price that gold has now surpassed, driven higher by a central bank buying spree, economic fragility worldwide and President Donald Trump’s attempts to rewrite the rules of global trade by imposing tariffs on allies and strategic rivals.

Winners and Losers

“Who is laughing on the side or looking at the side is China. It’s really benefiting from the US having a trade war with Europe.”
Kaja Kallas
The European Union’s foreign policy chief 
China stands to gain from the trade wars between the US and its allies, Kallas said in an interview with Bloomberg Television. Her comments came hours after President Trump threatened to impose a 200% tariff on wine, Champagne and other alcoholic beverages from France and elsewhere in the EU, the latest escalation in a growing transatlantic trade war.

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