Longtime Hasbro (HAS) CEO Brian Goldner isn’t keen on asking parents to pay more for their kids’ Transformer figurines or Monopoly board games this holiday season thanks to the Trump administration’s escalating trade war with main toy supplier China.
But it just might come to that if tariffs on a range of toys sourced from China go into effect on Dec. 15. Hasbro is a public company after all, and it has to protect its profits — which could be seriously hurt amid fresh tariffs.
“We certainly want to ensure that we're not raising prices on products right before the holidays. We would hope we would continue to have a productive dialogue and find other solutions to the situation,” Goldner told Yahoo Finance.
Goldner added, “If there were tariffs that were employed, we would then need to raise our prices as we are the importer. The tariff is applied as the product is imported into the United States. Then we would have to raise our prices. We're engaged with our retailers working through all of that.”
The Trump administration’s policy on trade with China has been all over the map for months. On Aug. 13, the administration said it would delay tariffs on a range of goods from China to Dec. 15 from Sept. 1. The stock market soared on the news. But on Aug. 23 after China retaliated with new tariffs of its own on U.S. goods, the president reversed course on his delay.
On Sept. 1, tariffs of about 15% will be placed on $300 billion in Chinese imports. Previously, the rate on this tranche was set at 10%. A tariff on the rest of the $300 billion that takes aim at consumer products like apparel, footwear and toys will arrive on Dec. 15. It will be hit with a 15% tariff versus the 10% previously expected.
Stocks were crushed on the surprise trade news.
Tough times for toymakers
It’s confusing times for multinational companies such as Hasbro that rely on China for its supply chain? You bet.
But Goldner — similar to his peers at fellow toymaker Funko — have taken action to shift as much production out of China to other countries as possible ahead of this holiday season. About 67% of Hasbro’s merchandise is now sourced from China, down from 90% a few years back and 75% or so entering 2019.
Hasbro has also bought production of board games and Play-Doh back to the U.S. It makes Magic: The Gathering playing cards in the U.S. as well.
By the end of 2020, Goldner expects to have only 50% of Hasbro’s inventory reliant on China.
The goal of this supply chain shift: minimize tariff-related price increases on consumers and order cancellations from major retailers.
“We would hope, again, that an engaged dialogue that we can lead our company and the industry to a broader strategic footprint over time, and forgo any tariffs in our industry,” says Goldner.
Brian Sozzi is an editor-at-large and co-host of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi
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