Mattel Announces Price Increases as Tariffs Bite into Toy Production Costs

Mattel, the iconic maker of Barbie, has warned consumers about potential price increases on its toys as the costs associated with U.S. tariffs escalate. The company plans to cut down on imports from China, which currently supplies a significant portion of its goods. Similar concerns have been echoed by major corporations like Ford, which also anticipates substantial costs due to these tariffs.

Barbie maker Mattel has announced that rising tariffs imposed by the Trump administration will lead to price increases on selected toys in the U.S. The toy manufacturer stated that it will also scale back its production in China in response to these rising costs.

Ford, the well-known automotive company, echoed similar sentiments, forecasting an additional cost burden of around $1.5 billion this year as a result of tariffs. Both companies are among a growing list of corporations sounding alarms over the financial ramifications of U.S. tariffs on their operations and the broader economy.

In updating investors, Mattel highlighted the uncertainty posed by fluctuating economic conditions. "Given the volatile macroeconomic environment and evolving U.S. tariff landscape, it is difficult to predict consumer spending trends in the latter part of the year, particularly during the holiday season," the company stated. The U.S. market represents approximately half of Mattel's global sales, with about 20% of its products obtained from Chinese manufacturers. The company aims to lower this reliance on Chinese imports to below 15% by next year.

Since taking office, Trump has instituted new import taxes reaching up to 145% on various goods from China. Recent government reports indicate that when combined with existing tariffs, some Chinese goods could face levis as high as 245%. In retaliation, China has enacted a 125% tax on various products imported from the U.S.

Mattel also sources products, including popular lines like Barbie dolls and Hot Wheels cars, from other countries like Indonesia, Malaysia, and Thailand, although these regions were similarly affected by Trump’s tariffs announced earlier this year, with pauses instituted for a 90-day period to assess the impact on trade.

Trump recently acknowledged the downsides of tariffs, suggesting that American children may end up with fewer dolls due to increased prices, but maintained that China would bear the brunt of the financial hit. Ford, for its part, is projecting that tariffs could add $2.5 billion in costs, mostly linked to increased expenses associated with imports from Mexico and China. To mitigate these expenses, the car manufacturer has implemented cost-reduction strategies, including rerouting vehicle shipments from Mexico to Canada to bypass U.S. tariffs.

The uncertainty surrounding trade policies has prompted Ford to suspend its guidance on annual earnings to investors.

Companies from various sectors, including tech giant Intel and footwear brands like Adidas and Skechers, have reported similar increases in costs due to tariffs. These businesses have noted that the unpredictable nature of trade regulations could heighten the risk of an economic slowdown or even recession. For instance, Adidas has predicted that tariffs will result in higher prices for popular sneaker models in the U.S.

Amidst this trade tension, Procter & Gamble, a major consumer goods provider, mentioned it is considering price adjustments on products such as Ariel detergent and Gillette razors to accommodate the increased costs of material sourcing. The current trade landscape remains fluid, leaving businesses grappling with how best to navigate the challenges posed by shifting tariffs and trade policies.