With the trade war between USA and China hotting up, it looks like customers in the USA may see a 25% increase on toys.
The Office of the United States Trade Representative has revealed that it has been ordered to “begin the process of raising tariffs on essentially all remaining imports from China, valued at approximately $300 billion.”
The details emerges just days after US president Donald Trump more than doubled tariffs on $200 billion worth of Chinese goods, escalating the China-US trade war to a new level.
Trump has tried to downplay the impact the tariff hike will have on the US, stating that “we are right where we want to be with China.” He cited China’s negation on the deal with the US as the cause of the tariff hike last Friday.
In a Twitter post, he said: “We will be taking in tens of billions of dollars in tariffs from China. Buyers of product can make it themselves in the USA (ideal), or buy it from non-tariffed countries.”
On Friday, the US increased a 10 per cent tariff on $200bn worth of Chinese goods to 25 per cent. Toys are now reportedly caught up in the mix of those imports being taxed under the increased tariffs.
The move has prompted cries of outrage from those in the US toy industry, including MGA Entertainment CEO, Isaac Larian, who posted on social media: “As if toy business in the USA wasn’t bad enough already, now comes these ridiculous tariffs.
“We have no choice but to raise our prices and the USA customers (not China’s) will end up paying for it.”
Steve Pasierb, president and chief executive at the Toy Association in the US has been active in lobbying against tariffs since the threat began to appear early last year. He has taken a leading role in the formation of the group Don’t Tax Toys.
“25 per cent tariffs on toys would devastate our industry,” he said. “93.5 per cent of toy manufacturers, wholesalers and distributors in the United States are small businesses… Toys are a big deal.
“The toy industry’s annual total economic impact on the US is $110.9 billion. The average price of a toy is around $10, but the estimated three billion units sold across the nation each year generates approximately $27 billion in direct toy sales.
“The toy industry supports an estimated 691,263 jobs generating more than $35.2 billion in wages for US workers. The toy industry generates $14.98 billion in tax revenue each year.”
Of the ongoing China-US trade war, president Trump’s economic adviser, Larry Kudlow, has said that “both sides will suffer.”
We will be watching this with interest as it develops.