Toy industry faces uncertain Christmas as Trump tariffs threaten prices, supply

WASHINGTON - The toy industry is sounding the alarm over steep tariffs imposed by the Trump administration on Chinese imports—a move that could have major ripple effects for manufacturers, retailers, and consumers, especially as the holiday season looms.

Toy makers brace for impact

What we know:

Greg Ahearn, CEO of the Toy Association, joined The Final 5 with Jim Lokay  to discuss the impact of the 145% tariffs on toys imported from China. And the message was clear: the stakes are high, and small businesses could be crushed.

"We represent over 850 companies at the Toy Association," Ahearn said. "A 145% tariff on toys imported from China is really untenable for every one of them."

While big-name companies dominate store shelves, Ahearn emphasized that the vast majority of American toy companies are not corporate giants. "Ninety-six percent of the manufacturers that make up the toy industry in the U.S. are small or mid-sized companies," he said. "A tariff like this could actually put many of them out of business if it stays in place too long."

President Trump has framed the tariffs as part of a larger push to bring manufacturing back to the U.S., calling it "Liberation Day." But Ahearn says relocating the complex global toy supply chain is easier said than done.

"There is some manufacturing in the U.S.—things like board games, paper goods, and large sandboxes—but 77% of toys are imported from China," he explained. "That supply chain has been in place for over 40 years. It has the tools, the technology, and the skilled handcrafting labor force needed for things like painting action figures and styling dolls."

Tariffs threaten holiday supply

The timing of the tariffs is also alarming, as toy makers enter the critical production window for the 2025 holiday season. "Christmas is now for the toy industry," Ahearn said, noting that toys for December are typically produced in April, May, and June.

With factories in China halting production and national retailers canceling toy orders, the industry is bracing for major disruptions. "These companies are not cash-rich," Ahearn said. "They don’t have access to massive credit lines. A 145% tariff creates huge financial risk for mass production."

Retailers, too, are wary. "We’ve seen national retailers canceling orders," he said, citing concerns that higher prices will turn shoppers away.

Ahearn is holding out hope that the toy industry could receive a carve-out or exemption from the tariffs—similar to what books currently enjoy. "Toys are the best learning products out there," he said. "There’s a history of toys being excluded from tariffs. The 1994 GATT agreement exempted toys from tariffs in participating countries, including the U.S."

He urged the administration to consider the broader impact of the policy. "We’re hoping the Administration takes a hard look at our industry, the uniqueness of our industry, and the importance of having affordable, low-cost toys for parents and caregivers this holiday season."

Despite the challenges, Ahearn ended the conversation on a reflective note. "It’s a tough time for many industries," he said. "But we’re doing everything we can to protect the future of play."