Mattel may soon increase the prices of popular toys like Barbie and Hot Wheels in response to new tariffs imposed by President Donald Trump, company executives revealed on Tuesday.
The toy giant, which manufactures around 40% of its products in China and less than 10% in Mexico, is exploring ways to adjust its supply chain to lessen the impact of tariffs. However, price hikes are also being considered.
“We have a range of mitigating actions in place,” said CFO Anthony DiSilvestro during Mattel’s fiscal fourth-quarter earnings call. He noted that these measures include optimizing supply chain operations and “potential price increases.”
DiSilvestro emphasized that Mattel will work closely with retail partners to find the right balance, always keeping consumers in mind when adjusting prices.
Impact of Trump’s Tariffs
This week, Trump imposed a 10% tariff on Chinese goods while temporarily pausing planned 25% duties on imports from Mexico and Canada. Although Trump often uses tariffs as a negotiation strategy, economists widely agree that such levies typically lead to higher prices for consumers.
Following Trump’s announcement of the 25% tariff on Canadian and Mexican goods, both countries ramped up border security efforts, leading Trump to suspend the duties. However, no similar agreement has been reached with China, leaving the 10% tariff in place.
Since about 80% of toys sold in the U.S. come from China, the tariff could have a significant impact on the industry. While toy companies like Mattel are attempting to offset costs through supply chain adjustments, many executives acknowledge that absorbing the full impact would cut into profits. As a result, some of the costs may be passed on to consumers through price increases.
Mattel’s Long-Term Strategy
With a diversified supply chain spanning seven countries, Mattel has more flexibility than some competitors to shift production and negotiate with suppliers. Additionally, about 40% of Mattel’s sales come from outside North America, where these tariffs do not apply.
By 2027, the company aims to further diversify its manufacturing footprint, ensuring that no single country accounts for more than 25% of its total global production. Currently, China and Mexico together make up around 50% of Mattel’s manufacturing. The company does not source any production from Canada.
While Mattel works to minimize the impact of tariffs, the possibility of higher prices for consumers remains on the table as the company adapts to the evolving trade landscape.
