According to executives on Tuesday, Mattel may soon increase the cost of toys like Barbie and Hot Wheels in reaction to new tariffs imposed by President Donald Trump.
In order to lessen the impact of tariffs, the toy giant, which produces roughly 40% of its toys in China and fewer than 10% in Mexico, told analysts it will try to reorganize its supply chain, but it is also thinking about raising prices.
During the company’s fiscal fourth-quarter earnings call, Anthony DiSilvestro, the finance head, stated, “We have a range of mitigating actions against the tariff.” Leveraging Mattel’s supply chains and possible price hikes are among such measures, he said.
“We always keep consumers in mind when we consider pricing actions, and we do work closely with our retail partners to achieve the right balance,” he continued.
Following Trump’s 10% tariff on Chinese imports this week, the remarks were made. Additionally, he put a 30-day hold on the proposed 25% taxes on imports from Canada and Mexico.
Both conservative and liberal economists concur that the levies will probably result in higher prices for consumers. Trump has frequently used the threat of duties as a bargaining tool to pressure other governments to comply with his demands, so there is no assurance that he will apply the tariffs on Mexico and Canada.
Both Canada and Mexico declared they would strengthen border security shortly after Trump proposed a 25% tariff on their exports, which prompted Trump to halt the penalties. Prior to Trump’s statement, both countries had been strengthening border security.
To avoid the tariffs, the U.S. and China have not yet reached a comparable arrangement. The toy sector, which obtains over 80% of its products from the area, will be significantly impacted if the 10% duty is kept in place.
Executives have privately acknowledged that they are unwilling to bear the expense themselves and cut revenues, despite public statements from businesses like Mattel that they intend to leverage their supply chains and collaborate with suppliers to lessen the impact of the tariffs. Some intend to have consumers pay the remaining amount through price increases if they are unable to pass on the full cost of the tariffs to suppliers.
Certain businesses with diverse supply chains, like Mattel, which has both its own and third-party factories in seven nations, are better able to shift production and rely on suppliers to reduce the impact on profitability. Additionally, it conducts roughly 40% of its business outside of North America, where tariffs are not applied as they are in the United States.
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Mattel anticipates that by 2027, sourcing from China and Mexico will account for over 25% of worldwide output, down from the current 50%. At the moment, it doesn’t source from Canada.