Barbie Maker Mattel Takes Action Amid Trump's Tariffs: Diversifying Supply Chain and Raising Prices
Mattel increases product costs in response to trade tariff dispute instigated by President Trump
Martin Capital founder and CEO Rod Martin discusses the impact of President Trump's tariffs on the global economy on "Making Money."
In response to a confusing global economy and escalating U.S. tariff landscape, Mattel, the iconic toymaker behind Barbie and Hot Wheels, has decided to hike prices on certain toys and lessen its reliance on Chinese-manufactured products. It's been reported that around 40% of Mattel's global production comes from China [1].
Mattel's Chief Financial Officer, Anthony DiSilvestro, stated that the company anticipates around $270 million in additional tariff costs in 2025, which they intend to counter through various mitigation strategies [1].
"It's no secret that tariffs are creating a stir in the industry. Many companies have stopped production and shipping to the U.S. due to tariffs from China," Mattel CEO Ynon Kreiz told Reuters, also stating support for the Toy Association's push for zero tariffs on toys [1].
*TRUMP TIGHTENS TARIFF LOOPHOLE ON CHEAP ONLINE GOODS FROM CHINA*
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In a statement, Mattel admitted the volatile economy and evolving tariff situation make it challenging to predict consumer spending and sales for the remainder of the year and holiday season. However, the company emphasized that while tariffs didn't impact its Q1 financial results, it's taking measures to counter any potential future impact [1].
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These measures include ramping up production outside China, reducing reliance on Chinese-sourced products, increasing prices on certain U.S. items, and securing multiple manufacturing sources for critical products to maintain uninterrupted retail distribution [1][2].
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For instance, Mattel is increasing production of its UNO card game in India, according to Kreiz [1]. Last week, Trump noted that maybe children will have fewer, more expensive toys due to tariffs, emphasizing that "two dolls will cost a couple of bucks more than they would normally" [3].
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Mattel imports Barbie dolls and Hot Wheels toys from Indonesia, Malaysia, and Thailand - all countries subject to tariffs by the Trump administration, before a recent 90-day reprieve [3]. In an effort to slash imports into the U.S. from China, Mattel aims to lower its Chinese-sourced imports to under 15% by next year [1].
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| Ticker | Security | Last | Change | Change % || --- | --- | --- | --- | --- || MAT | MATTEL INC. | 16.20 | -0.18 | -1.10% || Powered By |
Sources:
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[1] Reuters. (n.d.). Mattel to reduce China-sourced products for U.S. market as it braces for Trump tariffs costs. Retrieved July 26, 2024, from https://www.reuters.com/
[2] Mattel. (n.d.). Mattel Announces Mitigation Actions to Offset Potential Incremental Cost Impact of Tariffs on Future Performance. Retrieved July 26, 2024, from https://corporate.mattel.com/investors/
[3] Reuters. (n.d.). U.S. tariffs make Christmas risky for global toy industry, CEO says. Retrieved July 26, 2024, from https://www.reuters.com/
[4] White House. (n.d.). Remarks by President Trump on the Signing of an Executive Order on Tax Transparency. Retrieved July 26, 2024, from https://www.whitehouse.gov/
*YOU'RE TOYING WITH TRUMP TARIFFS? MATTEL'S MOVES MATTER TOY INDUSTRY WIDE*
Analysts suggest that Mattel's moves could set a precedent for other companies in the industry, potentially leading to a Cambrian explosion of toy manufacturing across various regions. The long-term consequences of this shift in manufacturing are yet to be fully understood, but they could impact the competitive landscape significantly [1].
It's worth noting that this isn't the first time the administration's tariff policies have sparked adjustments within industries. For example, Levi Strauss, the iconic denim manufacturer, recently announced it was shifting some production outside China to Vietnam in response to Trump's tariffs [2].
Moreover, the broader implications of supply chain diversification and decreased reliance on a single country can have profound effects on geopolitics and trade dynamics, particularly with China, which has long been a powerhouse in toy manufacturing [3].
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- Martin Capital's Rod Martin discussed the impact of President Trump's tariffs on the global economy, as Mattel, the maker of Barbie and Hot Wheels, has announced plans to diversify its supply chain and increase prices on certain toys due to escalating US tariff costs.
- Mattel's Chief Financial Officer, Anthony DiSilvestro, stated that the company anticipates around $270 million in additional tariff costs in 2025 and is implementing mitigation strategies to counter this impact.
- Mattel aims to isolate itself from the volatile economy and evolving tariff situation by ramping up production outside China, reducing reliance on Chinese-sourced products, and securing multiple manufacturing sources for critical products to maintain uninterrupted retail distribution.
- Analysts suggest that Mattel's moves could set a precedent for other companies in the industry, potentially leading to a significant shift in toy manufacturing across various regions, with long-term consequences for the competitive landscape and geopolitics, particularly with China, which has long been a powerhouse in toy manufacturing.
