The current US president has signed an executive order which will effectively put a 54% tariff on all imported goods from China and 46% on imported goods from Vietnam. This will have a huge impact on Hasbro and other toy companies who have their toys made predominantly in those two countries! Click through for more!
George Lucas – A True Visionary!
As you may know tariffs are paid by the importer, i.e. in that case it means that all toys Hasbro has made in China will be subject to 54% tariffs (it was 20% before) and all toys imported from Vietnam will now be subject to a 46% tariff (it was 3.3% before) and that the one paying the tariffs will be Hasbro. And since these tariffs are so high there is zero chance of Hasbro not passing on the added cost to customers. So at the end of it all US consumers will pay for the tariffs, no one else really.
Hasbro has been trying to be less dependent on China in recent years by moving some of its production to Vietnam, they are also trying to have toys made in India, but it will be quite a while before India could truly replace China (imported goods from India will have a 27% tariff). Vietnam was supposed to be safe from punitive measures unlike China, which is why quite a few companies moved production there, but now goods imported from Vietnam suddenly receive a whopping 46% tariff out of nowhere.
Setting up toy factories in the US is no alternative. For one Hasbro does not actually own a single factory, they have entirely outsourced production and contract factories, and it would take years to set up the factories, but even then the supply chains and logistics that make toy production possible simply do not exist in the US and Hasbro would have to import raw materials and machines anyway (which means tariffs, at least for now), this before the lack of a trained workforce who would actually want to assemble toys all day long is even considered.
Hasbro’s consumer products segment (all the toys) is already struggling and has very slim margins and is experiencing revenue decline, the 54% and 46% tariffs Hasbro will now have to pay for basically all of its toys could seriously tank revenue even further.
Wizards of the Coast with Magic the Gathering will keep Hasbro afloat, the cards are printed in the US and WotC is responsible for most of the profits Hasbro makes, but the new tariffs could seriously accelerate the shift of Hasbro away from classic toys to games.
What that all means for Star Wars (the action figures are still made in China) is yet to be seen, i.e. Hasbro has not said yet how much more the figures will be, Cocks, in a previous interview, merely said that there will certainly be price increases in a few months from now, but you don’t need to have studied maths to know that 54% and 46% tariffs will result in a massive price hike (of course those tariffs are applied to whatever Hasbro pays to import the goods, i.e. not the actual MSRP retailers ask for, but it could still mean the figures will cost up to $5 more).
What will you do once action figures (and basically everything imported into the US) will become substantially more expensive? Buy even fewer Hasbro toys / action figures? What do you think that will do to upcoming toylines like for the Mandalorian movie? These toys are made in China and there is no way to change it any time soon. Star Wars merchandise sales are already struggling in general. Could it, eventually, mean Hasbro pulls out because it has become unsustainable? Could the tariffs doom the Mandalorian toyline and end the era of Star Wars at Hasbro?
Of course it is always possible that the current US administration will change course next week, or tomorrow or next month or that toy lobby groups convince the president that certain product groups should be excempt from excessive tariffs, so we’ll have to see. But as of right now severe price hikes for Star Wars toys (and everything else) in the US will be inevitable.
For further reading I suggest googling “Smoot-Hawley Tariff Act” from 1930.