Hasbro (HAS), the company behind iconic toys and games like Monopoly and Play-Doh, says new tariffs could drive up the cost of toys, devastate the industry and pose safety risks.
The toymaker is one of hundreds of companies that have testified in Washington over the past week, asking the Trump administration to spare them from the next round of tariffs.
Hasbro Chief Operating Officer John Frascotti is due to testify on Monday.
In comments submitted before the testimony, the company told U.S. Trade Representative Robert Lighthizer that 85% of all toys sold in the United States are imported from China.
Currently, toys and games are on China’s list of $300 billion worth of goods that could face tariffs of up to 25%.
Hasbro argues that the tariffs would cause “significant and disproportionate” economic harm to the toy industry and to American families. The company estimates that more tariffs could reduce the toy industry’s contribution to the US economy by $10.8 billion.
“This couldn’t come at a worse time for our industry. We, and the U.S. toy industry as a whole, are facing some serious headwinds from the recent bankruptcies of two major toy retailers, K-Mart and Toys ‘R’ Us, which have already put approximately 30,000 jobs Americans in danger,” said Kathrin Belliveau. senior vice president of Hasbro, in comments submitted to the USTR ahead of the hearing.
Belliveau said the tariffs would make matters worse and lead to potential job losses across the industry, including at Hasbro.
Mattel (MAT) also submitted comments to the USTR, saying the tariffs would put American jobs at risk.
“Although unskilled production operations typically occur in China, the U.S. toys, games, and children’s products industry maintains significant product design, marketing, and other key operations in the United States. States that would be negatively affected by tariffs on these products,” said Corinne Murat, Mattel. Director of Government Affairs, in the comments submitted.
Mattel said that in 2018, China accounted for $11.9 billion, or 84% of total US toy imports.
Fares could lead to safety risks for children
If tariffs raise the price of toys, Hasbro expects consumers to buy fewer of them — or buy cheaper, potentially dangerous toys instead.
“The tariffs could encourage American consumers to buy cheaper, dangerous and counterfeit toys that do not meet strict American safety standards,” Belliveau said in prepared comments.
These safety standards are part of why toymakers say they’re so dependent on Chinese manufacturers, and why that isn’t expected to change anytime soon.
“A hasty change in supply could jeopardize the carefully constructed safety guardrails by American toy companies for this supply chain,” Murat said.
“Our suppliers in China are qualified and trained to meet strict US product safety standards that apply to toys and games manufactured for use by children,” Belliveau said. “This workforce does not currently exist outside of China.”
Still, Hasbro says it’s been trying to diversify its supply chain since 2012. At that time, it says 80% of products sold in the United States came from China. In 2018, that number fell to 67%, and the company’s goal is to reach 60% by the end of 2020.
“In the meantime, Hasbro and other American toy companies will have no choice but to continue importing toys and games from China and passing on the increased cost of tariffs to American customers,” said Belliveau.
Currently, Hasbro claims that 20% of its toys and games sold in the United States are made in the United States.
In prepared remarks, Hasbro said the tariffs would fall short of the administration’s goal of spurring U.S. manufacturing — but instead, the tariff burden would make it harder to move manufacturing out of China. .
In its prepared comments, Mattel made a similar argument, noting that consumers will be harmed regardless of how toymakers react to the tariffs.
“It would be difficult to change supply in the near future, which means the proposed tariffs would lead to higher consumer prices and reduced consumer choice. In the event that the increased tariffs ultimately force US toy companies to ditch their established Chinese suppliers, the companies would incur significant upfront testing and certification costs associated with their new suppliers, which would drive prices up again. for consumption,” Murat said.
Jessica Smith is a reporter for Yahoo Finance based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.
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