Trump’s China tariffs threatening Christmas as US retailers warn of toy shortages, higher prices

SEOUL - US President Donald Trump’s China tariffs are threatening Christmas.

Toy makers, children’s shops and specialty retailers are pausing orders for the winter holidays as the import taxes cascade through supply chains. Factories in China produce nearly 80 per cent of all toys and 90 per cent of Christmas goods sold in the United States.

The production of toys, Christmas trees and decorations is usually in full swing by now. It takes four to five months to manufacture, package and ship products to the US.

Mr Trump’s 145 per cent tariffs

have caused a drastic markup in costs for American companies. Most of the entrepreneurs who have shared their plans with The New York Times have not yet cancelled their orders. They hope the president will back away from the tariff brinkmanship.

But the alarm in the industry is palpable, with the companies predicting product shortages and higher prices. Some business owners, citing how crucial holiday sales are to their bottom lines, are consulting bankruptcy lawyers.

“We have a frozen supply chain that is putting Christmas at risk,” said Mr Greg Ahearn, chief executive officer of the Toy Association, a US industry group representing 850 toy manufacturers. “If we don’t start production soon, there’s a high probability of a toy shortage this holiday season.”

Mr Trump appeared to acknowledge that toy shortages are possible due to his tariff hikes.

“Somebody said, ‘oh, the shelves are gonna be open’,” Mr Trump told reporters on April 30. “Well, maybe the children will have two dolls instead of 30 dolls, and maybe the two dolls will cost a couple of bucks more.”

For America’s Christmas industry, Chinese manufacturing is unmatched in its production speed and capability. Toy makers overhaul large portions of their product lines every year to adapt to the changing preferences of children.

Ms Kara Dyer, founder of Storytime Toys, a maker of children’s books with playset puzzles, usually places a big holiday order with her Chinese factory in the first two weeks of April to have enough inventory by mid-July. The Christmas holidays account for about two-thirds of her annual revenue.

Ms Dyer placed a small order of US$30,000 (S$39,200) worth of products before the latest tariffs, never expecting they would surge to such high levels. That shipment is en route to the US. When it arrives, she said, she expects to owe US$45,000 in tariffs. The shipment will provide the company with enough inventory for a few months, and she said she would probably raise prices at least 20 per cent to cover the tariff costs. But she is waiting to make a big holiday purchase.

“I’m going to hold out hope for another two weeks that the tariffs will be removed and I’ll be able to place the order,” she said. “But if not, I will have to put my business on pause. I will definitely not place an order if the tariffs are in effect. It wouldn’t make any sense.”

In a Toy Association survey of 410 toy manufacturers with annual sales of less than US$100 million, more than 60 per cent said they had cancelled orders, and about 50 per cent said they would go out of business within weeks or months if the tariffs remained.

Mr Trump has in recent days struck a conciliatory tone towards China and the tariffs, fuelling some hope among business owners that he may exempt industries that do not pose a national security threat.

Mr Ahearn said he was in Washington last week to lobby for a 24-month reprieve, which could give companies time to find ways to make their products in the US.

But even if Mr Trump grants importers temporary relief, significant disruptions will occur as companies rush to fulfil orders. Shipping costs are expected to surge, similar to the frenzy during the Covid pandemic, when a shortage of shipping containers led in some cases to a tenfold increase in freight prices. NYTIMES