One of the goal of US President Donald Trump’s 145% tariffs against China is to encourage U.S. manufacturers to bring production back to America. But the result of doing so is low, especially when it comes to toys.
Mattle CEO Ynon Kreiz remains sceptical about the possibility of toy manufacturing returning to the U.S. He made it clear that Mattel is one of the world’s largest toy manufacturers, which does not foresee a shift in its global production strategy anytime soon.
Ynon Kreiz Says Toy Not Returning to America
“We don’t see that happening,” says Ynon Kreiz in a response to the statement of bringing toy production back to the U.S. due to the ongoing trade conflict between the two U.S. and China.
The statement came less than a day after Mattel withdrew its annual financial targets, stating the mounting pressure from tariffs and rising costs in its trade chain.
The CEO further explained that while a significant portion of toy making, designing, development, product engineering, and brand management takes place in the U.S., the manufacturing itself remains overseas. The reason for this is that producing toys in countries outside of the U.S. allows the company to maintain competitive pricing while still delivering high-quality products, he emphasized. Making of toys abroad ensures Mattel can keep its toys affordable for consumers, despite the challenges posed by the tariffs.
“We need to remember that a significant part of toy creation happens in America,” he said. “Design, development, product engineering, brand management all happens in America. Making product, producing product in other countries, allows us to create quality products at affordable price points.”
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Mattel’s Global Manufacturing Diversification
Mattel has been working for nearly a decade to reduce its reliance on China for manufacturing, according to Kreiz. By the end of 2025, less than 40% of Mattel’s products will be sourced from China. Furthermore, the company plans to ensure that no single country will account for more than 25% of its product sourcing within the next two years. This diversification strategy reflects Mattel’s attempt to minimize the impact of trade disruptions and other external challenges.
Despite efforts to reduce dependence on China, Mattel remains focused on managing costs and navigating the tariffs’ impact. One of the company’s primary strategies for mitigating the effects of the trade war is raising prices in the U.S. while still working to maintain affordability for customers.
Price Hikes and Affordability Measures
In an effort to absorb the increased costs resulting from the tariffs, Mattel plans to increase prices for its products in the U.S. However, the company is committed to keeping many toys under $20, a price point that is important for consumers. According to Eric Handler, an analyst at Roth Capital Partners, Mattel intends to keep between 40% and 50% of its products priced under $20. This pricing strategy aligns with the company’s commitment to delivering high-quality toys while balancing cost considerations.
“We are committed to continuing to create quality products and finding the right balance of price and value, all in the service of the consumer,” Kreiz said, emphasizing Mattel’s dedication to its customer base amid the trade turmoil.
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Stock Price Decline Amid Tariff Concerns
The impact of the ongoing trade war with China has been felt on Wall Street, with Mattel’s stock price dropping by approximately 19% since the tariffs were first announced on April 2. The uncertainty surrounding the trade conflict, coupled with the financial strain from the tariffs, has led to a negative market reaction.
Mattel’s response to the trade war reflects a broader trend in global manufacturing, as many companies are forced to reconsider their supply chains and pricing strategies in light of the escalating tariffs. While Kreiz’s comments suggest that toy manufacturing won’t return to the U.S. anytime soon, Mattel’s focus on diversifying its production sources and raising prices in the U.S. underscores the company’s efforts to remain competitive in a challenging global market.
Final Thought
The trade war between the two big countries the U.S. and China will continues to affect companies worldwide, Mattel’s CEO, Ynon Kreiz, has made it clear that the toy giant will not be bringing manufacturing back to the U.S. anytime soon. Instead, Mattel will focus on diversification and pricing strategies to mitigate the impact of tariffs. While the company plans to raise prices in the U.S., it remains committed to maintaining affordable price points for consumers, despite the financial pressures posed by the ongoing trade conflict.
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