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.” |