America’s biggest toymakers are facing down a grim financial reality, as economic headwinds and U.S. trade policy continues to squeeze margins and see higher costs being passed onto the consumer.
Financial results released last week by America’s largest toy manufacturers, Mattel and Hasbro, revealed the continued costs of the trade war and lingering uncertainty around tariffs.
Mattel, whose brand portfolio includes Barbie dolls and the UNO card game, reported a 6 percent decline in second quarter net sales. Meanwhile, Hasbro, the company behind Nerf and My Little Pony, reported a 16 percent decline in revenue for its core toys and games business. While this was almost offset by significant improvements in its trading card and digital gaming segments, the company’s net sales were nevertheless down 1 percent year-over-year as it reported an $856 million net loss for the quarter.
In their results and subsequent earnings calls, both companies cited the continued uncertainty created by tariffs, which continue to weigh on supply chains and inventory levels. Hasbro attributed its net loss in the quarter to a $1 billion impairment charge related to its consumer products segment and caused by the implementation of tariffs.
While most sectors of the economy are exposed to major shifts in trade policy, toys are particularly vulnerable given the industry’s reliance on globalized supply chains and outsized dependence on Chinese imports, with around three-quarters of the toys sold in America manufactured in China.
Prior to the 90-day pause agreed between the U.S. and China in May—which has seen tariffs temporarily lowered from their previous, staggering rates—the two companies were among those who said they may need to raise prices to offset the impact of tariffs. This led to toys—dolls in particular—becoming a surprising flash point in the debate over trade policy, and sparked a confrontation between the Trump administration and Mattel after CEO Ynon Kreiz said that the company had no plans to relocate manufacturing operations to the U.S.
