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Tariff taxes start biting: Toy prices rising at fastest pace ever: Outlook grim [1]

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Date: 2025-06-25

In May alone, the price of toys increased by 2.2% compared to a general price inflation of 0.1%. Without context, this could be a precursor to a 25%+ annual rate of inflation for toys. Alternatively, it could be an outlier due to a temporary set of conditions.

With context, the reason is clear — Trump’s trade taxes (aka tariffs). After a few months of retailers and their suppliers pursuing last-ditch strategies to moderate price increases from Trump’s trade war, all workarounds have been tried. There is zero fat left in the system. And the costs of Trump’s tariffs are starting to bite.

Toys are the canary in the coal mine. A full 75% of toys sold in the US are made in China. Even though TACO has backed away from his 145% penalty, tariffs on Chinese-made goods are still 30%. And despite the best propaganda by the administration, some, if not all, of those taxes will be paid by the American customer. Why? Because America’s consumer products economy is efficient.

In a free-market economy, adding cost to an item increases the price of that item. Tariffs are an added cost. Retailers, wholesalers, importers, and/or foreign manufacturers may be able to absorb some of the additional cost. But there’s a narrow limit.

In a free market, all of those entities are already operating with slim margins. If they weren’t, then someone else would have stepped in and offered a better deal. That’s how free markets work.

To date, in 2025, annual inflation has remained low at 2.4% . MAGA fans use that stat to say claims Trump’s tariffs will lead to price increases are bogus. However, the rising price of toys belies that wishful thinking.

The Washington Post sums up the state of play thus (the paywall should be down):

Toy prices are rising at their fastest pace on record, the result of stiff new tariffs in an industry where 3 out of 4 items come from China — one of the first examples of just how quickly new trade policies are raising prices for Americans. Although the full effect of President Donald Trump’s new import taxes has yet to show up in economic data, analysts say the toy industry — which relies on a steady flow of relatively low-priced imports — offers clues into how higher costs could soon ripple through the economy. The price of toys, games and playground equipment rose a record 2.2 percent between April and May, far outpacing the 0.1 percent inflation rate for all items that month, according to the Bureau of Labor Statistics. Economists expect those increases to pick up in the coming months, as more manufacturers and retailers are forced to pass on higher costs.

Here’s the info in a chart:

Isaac Larian, chief executive of MGA Entertainment, the toy giant behind L.O.L. Surprise!, Little Tikes, and Bratz, has this to say.

“Prices have gone up, there’s no doubt about it. But the inflation is just starting. There’s going to be a domino effect: You’re going to see prices go even higher. You’re going to see empty shelves and a lack of innovation.”

Cynics might dismiss Larian as an industry shill with a political agenda. However, Trump himself has acknowledged that his tariffs will lead to higher toy prices. In April, he told reporters that:

“Maybe the children will have two dolls instead of 30 dolls, you know? And maybe the two dolls will cost a couple of bucks more than they would normally.” Adding later, in case you missed the point: “I’m just saying they don’t need to have 30 dolls. They can have three.”

What a sociopath. His friends may have children with 30 dolls. But what of the families living paycheck to paycheck, praying to God that they can afford one doll next Christmas? What’s his message to them? Wait until next year?

WaPo talked to people in the toy business. Here are their stories.

In Keene, New Hampshire, Douglas, a wholesaler that sells plush bears, flamingos, and other stuffed animals to local retailers, has raised prices by 5 percent to offset recent tariffs. President Scott Clarke says he has had to pass on those costs to the small businesses he sells to — most of which have no choice but to mark up their prices as well. In his words:

“It’s a tough situation. We’ve absorbed some of the tariffs, but there’s only so much we can do. Ultimately, this is a tax on American businesses, and it’s the consumer that’s having to pay.”

Amy Rutherford, who owns Pippin Toy in Alexandria, Virginia, is not only concerned about rising prices. She, like everyone else, has no idea what the Bozo in the Oval is going to do next:

“We’re doubling down on bestsellers and not trying anything new this year, because we just don’t know what’s going to happen. People are already moving to lower-dollar items — spending $30 on a plush toy instead of $75, for example — and I think that’ll continue.”

The problem for toy retailers is bigger than it appears. China is a factor in the supply chain even when the toy company is ostensibly not Chinese. Caroline Rodrigues owns two Merci Milo toy shops in Los Angeles and Portland, Oregon. She makes the point that even toys from European, Japanese, and Korean toy companies almost all rely on Chinese parts or manufacturing to some extent.

“There’s just no escaping China, Even when I think I’m buying from a European company, the shipments arrive from China.”

Rodrigues is also concerned about the unpredictability of rapidly changing trade policies and steep import costs, which have made it all but impossible to plan for the future.

“Every package I get now, I get hit with a tariff. Sometimes it’s $50, and sometimes it’s $1,000 or $2,500. I place an order and it’s like, ‘Okay, what am I going to have to pay this time?’ It’s anybody’s guess.”

What a clusterfuck.

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